QROPS and SEIS changes quietly slip in to law books

QROPS and SEIS changes quietly slip in to law booksThe Finance Act 2012 has slipped quietly on the statute book after receiving royal assent.

The act ratifies QROPS law changes that saw hundreds of schemes close to new business in Guernsey, the Isle of Man and New Zealand earlier this year.

Also of interest to wealthy investors and retirement savers is confirmation of the seed enterprise investment scheme (SEIS) sponsored by Chancellor George Osborne.

The new QROPS rules outlaw Guernsey’s S157 QROPS and the Isle of Man’s S50c QROPS that offered enhanced tax benefits.

The confirmed QROPS rules call for providers to offer the same tax benefit to residents and non-residents from an offshore pension scheme.

The SEIS investment scheme tax breaks are also confirmed in the act.

Investors can expect a tax reduction of up to £50,000 on a maximum investment of £100,000 in a SEIS in this tax year, plus a capital gains tax exemption of up to 28% on the disposal of any assets where the proceeds are reinvested in to a SEIS.

The income tax reduction is available to taxpayers regardless of the rate of tax they pay, while basic rate taxpayers pick up an 18% CGT exemption, with the upper rate reserved for higher and top rate taxpayers.

The CGT exemption is only valid for the current tax year.

SEIS investments are available to UK resident taxpayers, even if they working overseas temporarily.

SEIS schemes are aimed to encourage investment in small, start-up companies in the technology and creative sectors that would otherwise struggle to raise funding from conventional sources, like banks.

Maximum investment in a SEIS is £150,000 over two or more tax years. Disposal of shares is also exempt from CGT.