UK’s first Shari’ah-compliant Seed Enterprise Investment Scheme (SEIS) 

islamic finance

IFAAS, the international Islamic finance consultancy and Portillion Capital have launched the UK’s first Shariah compliant Seed Enterprise Investment Scheme fund. The Portillion Capital Shariah Compliant SEIS Fund (SEIS Fund) is available to investors immediately; however, the first tranche of investment will close shortly, with more tranches to follow soon after.

The new SEIS Fund allows UK-based individual investors not only to invest in start-up and early stage businesses with high growth potential, but to do so in a Shari’ah-compliant, socially responsible and ethical way. IFAAS acts as Shari’ah adviser to the fund. Two weeks since its official launch earlier this month, the fund has already generated more than GBP 1 million, 80 per cent of which has come from non-Muslim investors.

Farrukh Raza, Managing Director, IFAAS, said, “IFAAS is proud to remain at the forefront of the rapidly changing landscape of Islamic finance industry with the launch of the new Shari’ah-complaint SEIS Fund. Portillion is a leading player in Shari’ah compliant financial services, and shares our commitment to pioneering new and innovative Shari’ah-compliant financial solutions. The fact that the SEIS Fund is the first of its kind in the UK is particularly significant, as the UK leads the soaring demand for Islamic finance in Europe, with the rising market for Sukuk as a contributing factor.”

The British Government launched the Seed Enterprise Investment Scheme in 2011 as part of its initiative to boost economic growth through the promotion of new enterprise and entrepreneurship. It is designed to help small, early-stage companies to raise equity finance by offering a range of tax reliefs to individual investors who purchase new shares in the SEIS fund investing in those companies. For investors, this means that the level of capital at risk is reduced, and for suitable companies with Shari’ah-compliant business activities, this means that they will be able to develop and grow their business activities in line with ethical and Shari’ah standards.

Kamran Sattar, Chief Executive Officer and Co-founder of Portillion Capital said, “The Portillion Capital Shariah Compliant SEIS Fund aligns with the UK government’s strategies of promoting entrepreneurship and creating equal opportunities for all communities, and we are proud to have worked with IFAAS on such a robust financial product. Speaking at the World Islamic Economic Forum in 2013, David Cameron said that never again should a Muslim in Britain feel unable to start a business because they cannot get a start-up loan, due to their religion. We feel that, with the UK’s first Shari’ah-compliant SEIS Fund, we have taken the lead in helping to make his vision become a reality.”

The main benefits for UK taxpayers are;

  • 50 per cent income tax relief in the tax year of investment on up to £100,000 individual allowance
  • 14 per cent capital gains tax (CGT) relief on capital gains tax in the tax year of investment
  • Any gains upon realisation are free of CGT
  • Loss relief available to set against income tax which together with SEIS income tax and CGT relief is equivalent to 86.5 per cent total relief
  • Reliefs can be carried back to prior tax year subject to available allowance

For every GBP 1 that an Investor invests in the SEIS Fund they receive 50p SEIS income tax relief and 14p capital gains tax relief, meaning that the net cost to the investor is 36p for every GBP 1 invested. If the investment fails then maximum loss relief of 22.5p is also available which together with SEIS income tax and CGT relief is equivalent to 86.5p relief for every GBP 1 invested.

 

Source: CPIFinancial – UK’s first Shari’ah-compliant Seed Enterprise Investment Scheme (SEIS)

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