Autumn Statement 2011: Osborne courts investors in start-ups with new tax reliefs

The government is to launch a new investment tax relief scheme aimed at improving small companies’ access to finance, the chancellor has confirmed.

George Osborne announced in today's Autumn Statement that the new Seed Enterprise Investment Scheme (SEIS) starting in April next year will offer 50% tax relief to anyone investing up to £100,000 in start-ups.

The government will also offer a year-long capital gains tax relief on profits collected in 2012-13 and then invested back through SEIS in the same year.

It is believed the scheme is likely to cost the Treasury £60m between 2015 and 2018.

Speaking to the Commons, he said: "We've supported enterprise by increasing the generosity on the Enterprise Investment Scheme. Today, we are extending this Scheme specifically to help new start-up businesses get the seed investment they need.

"Even at the best of times they can struggle to get the finance they need – and in the current credit conditions that struggle too often ends in failure."

Commenting on the scheme, Phil Orford, chief executive of the Forum of Private Business, said: "We welcome the announcement of 50% income tax relief and a one-year capital gains holiday for those investing in start-ups under the Seed Enterprise Investment Scheme (SEIS), but the government should have acted to encourage private lenders too.

"Small firms need a range of funding options, and equity finance is certainly one of these, but lending at interest remains their preferred route by far," he said.

Small companies will also see the one year business rate holiday, due to end in October 2012, extended for an additional six months.

The statement also included details of the government's plans to simplify the Enterprise Investment Scheme through the relaxation of the connected person rules and the definition of shares that qualify for the relief.