SEIS investments in Science and Engineering Start-ups.

The SEIS scheme was introduced in 2012 and offers the most generous tax breaks of any government scheme in the last 50 years to encourage investment in start-ups.

Oxford Technology has been investing in science start-ups since 1983, so we are very experienced in this specialist field.  It was therefore natural for us to establish a fund – OT(S)EIS – to invest in science start-ups enabling investors to reap the benefits of the SEIS scheme, while also spreading the risk over several investments.

It is good to be able to report that this strategy has been very successful so far (we expect this success to continue, but of course we cannot guarantee it).  Specifically, the results to date are as follows:

By 30th June 2018, OT(S)EIS had completed 99 investments in 32 companies.

The figures for the fund as a whole since its inception are as follows:

Gross amount invested by OT(S)EIS:                                    £4.70 m

Cash back to investors via tax refunds:                                £1.87m

Net cost of these investments after tax reliefs:                    £2.82 m

Fair value:                                                                              £10.05m

Tax free gain (on paper only so far):                                      £7.23 m

The investments are all in and around Oxford and they are all in companies with new science or new engineering.  Our quarterly report, which has a page of information about every investee company may be downloaded here.

SEIS Tax Reliefs Summary

– Income Tax bill reduced by 50% of investment

– Income Tax bill reduced further if the business fails – up to 22.5% – 50% relief against capital gains which is not merely deferred but cancelled

– No tax on Capital Gains from investments

– No inheritance tax on shares after 2 years

– Tax reliefs can be claimed as if the investment had been made in the previous financial year, if the investor wishes

We think it is sensible for anyone who pays UK income tax to consider making SEIS investments.  Getting 50% back at the start is very generous and the gains being tax free on the winners is also good.  Investments in science start-ups are also interesting, especially to PECM readers.

In May 2018, one of our investee companies, Oxford Nanoimaging, in which we made an SEIS investment of £100,000 in 2016 at £20 per share (so £10 after tax relief) raised $25m at £173.40 per share.

Oxford Technology Management

Magdalen Centre
Oxford Science Park
Oxford OX4 4GA

Tel: 01865 784466

Website: http://www.oxfordtechnology.com/

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