Investors pouring cash in to a dedicated scheme for start-up businesses to pick up generous tax breaks.
The latest official data from HM Revenue & Customs shows £189 million was staked with 2,320 fresh start businesses under the Seed Enterprise Investment Scheme in the 2017-18 tax year.
The figures were in line with those posted for the 2016-17 tax year.
The average investment was £81,000 with most of the cash going to companies in the information and communications sector in London and the South East.
Investors putting this amount of cash with SEIS would collect a 50% income tax refund – £40,500 against a maximum tax break of £50,000 – calculated as half the capped annual investment of £100,000 an investor can sink into SEIS.
Any growth in share value is tax free, while after three years, the shares can be sold with no capital gains tax.
If the SEIS investment failed, the investor can look to loss relief to reduce their pain.
Potential investors should note that the £100,000 a year SEIS investment limit does not impact on pension savings or money put into ISAs in the same tax year, so can be made alongside or instead of these savings.
SEIS investors and investments 2017-18
Most companies (60%) received investments of more than £50,000.
HMRC estimates 8,980 investors will gain SEIS tax breaks for 2017-18 against investments of £154 million, with 58% of investors claiming tax reliefs putting £10,000 or less into a SEIS company.
Source: HMRC
SEIS investment by business sector 2017-18
Information and communications was by far the largest sector attracting investment in 2017-18, accounting for around £69 million or 37% of all SEIS money.
Source: HMRC