SEIS: income tax relief: company and investor procedures: attribution of SEIS relief to shares
Normally the amount of Income Tax relief attributable to a holding of shares will be self-evident. Where, however, the maximum amount on which relief is available for a year (see VCM31130) is exceeded, the position is not always clear. In this situation the total relief obtained for the year is apportioned between all the holdings of shares for which relief was claimed, or the individual can choose to claim relief on some shares and not on others.
Mr Frazer subscribes £50,000 for shares in each of four qualifying companies in 2012/13, giving a total investment of £200,000. But he can only claim relief on a maximum of £100,000. So, for instance, he can opt for relief to be given on the subscriptions for all the shares in two of the companies, or have the relief given on half of the shares in all four companies.
Where some of the shares in a holding were acquired by means of a bonus issue in respect of shares already held, they are treated as having been acquired as part of the original holding.
Mr Thomas subscribed £48,000 for 2,400 shares issued on 1 June 2012, and obtained relief on that amount. On 1 December 2013 there was a ‘ten for one’ bonus issue, so he is regarded as having acquired 26,400 shares on 1 June 2012.
If Mr Thomas sells 19,800 shares on 1 September 2014 for £54,000 the relief to be withdrawn is tax on 19,800 / 26,400 x £48,000 = £36,000.
If the date when Mr Thomas sells is 1 September 2015 (more than three years after 1 June 2012 but less than three years after 1 December 2013) no relief is withdrawn, because all the shares are regarded as issued on the earlier date.