SEIS / EIS Information
Charlock Stud has successfully formed and managed four SEIS Bloodstock Companies established to trade bloodstock profitably, particularly pinhooking foals and covering maiden fillies fresh off the race track for onward sale as broodmares in foal.
All schemes receive HMRC Advanced Approval before funds raised are expended.
Whilst individual investors must seek their own independent advice, generally SEIS schemes have the following tax advantages for qualifying UK tax paying investors.
- Income Tax liability will be reduced by 50% of the value of the amount invested providing the shares are held for at least three years.
- Where Capital Gains are realised on the disposal of assets, the CGT on the chargeable gain is reduced permanently by 50% providing an equivalent amount of the chargeable gain is invested into an SEIS qualifying company.
- CGT Investment Relief is available in addition to the 50% Income Tax Relief provided that the disposal of assets that give rise to the gains takes place in the same tax year as theinvestment in the SEIS company.
- Any gains realised on the disposal of the Company’s shares after three years, will be Capital Gains Tax free.
- The shares will qualify for Business Property Relief for Inheritance Tax purposes.
- The companies themselves will be subject to Corporation Tax on profits realised in any year.
Foal purchase criteria
- Sire – must be fashionable & in demand.
- Sex – colts are generally favoured.
- Conformation – must be correct & walk well.
- Pedigree – should come from a good family.
- Temperament – good disposition.
- Scarcity value – need to be in top quartile of sire’s progeny at the sales.
- Bloodstock agent – selection based on knowledge & expertise.
A horse report will accompany all purchases made explaining the rationale behind their purchase together with photographs and pedigree updates.
All purchases will board at Charlock Stud and available to view at any convenient time.
Past performance and risk factors
Details of the past performances of SEIS companies are available upon request but no matter how successful past performances have been, it must be recognised that bloodstock investment is in the very high risk category and investors should have regard to the following.
- Insurance – Mortality & wind insurance will be considered subject to cost, but investors should not assume that such insurance will necessarily be purchased.
- Vetting of prospective foal purchases at sales – Whilst this is not considered to be economically viable, we have recently scoped all potential purchases.
- Requirement for further funds – It is envisaged that the initial working capital available to the company will be sufficient for at least the first twelve months of trading, but investors need to be aware that further funds may be required which would qualify for EIS relief, although every effort will be made to avoid this eventuality.
- Loss in value of assets – Bloodstock assets can be impaired at any time through accident, injury, illness or death and whilst the company intends to protect its assets through good husbandry, accidents do happen and the company may experience losses not necessarily covered by insurance.
- Taxation – The Directors will conduct operations in a manner whereby investors should be entitled to receive SEIS reliefs but no such guarantees can be given and investors must seek their own independent financial advice in this regard, especially given the changing nature of taxation’s rules and reliefs.