Tax Relief: Individual Investors - effect of a claim - investments from 6 April 2013
Investments from 6 April 2013
For investments made on or after 6 April 2013 a measure of carry forward of unused relief is allowed.
If on reducing their tax liability to zero an individual has been unable to use their full entitlement of 5% of the invested amount, the unused excess may be carried forward and set against later years, where capacity is available.
The carry forward of unused relief may not be made to a period subsequent to the 5 year claim period for the particular investment. Any unused relief at the end of the 5 year period is lost.
An investor who invested £10,000 in a CDFI and would be entitled to relief of £500 each year, has a reduced tax liability in year 3 of £300. £200 is therefore excess.
In year 4 their tax liability is £2,000 so they are able to use the £500 yearly relief along with the £200 carried forward and reduce the liability to £1,300.
An investor who invested £10,000 in a CDFI has no tax liability in year 4 and a tax liability in year 5 of £700. The excess from year 4 can be carried into year 5. The maximum relief due for the year is £700. As this is year 5 and the end of the claim period, the unused excess of £300 is lost.