HMRC internal manual

Venture Capital Schemes Manual

VCM40050 - Seed Enterprise Investment Scheme (SEIS): SEIS disposal relief: Income Tax relief restricted: example

TCGA92/S150E (4) and (5)

  • December 2012 an investor subscribes £150,000 for 100,000 shares in a SEIS company.
  • Maximum Income Tax relief of £50,000 is given in the tax year 2012-13.
  • January 2017 all the shares are sold for £270,000.

The chargeable gain before any exemption is calculated:

Disposal proceeds £270,000
Less cost £150,000
Chargeable gain £120,000

The TCGA92/S150E(5) formula is:

R = Amount of Income Tax relief = £50,000
T Subscription x SEIS rate (50%) £75,000    

Only a part of the gain is treated as CGT-exempt. The exemption is restricted to:

£120,000 x 2 / 3 = £80,000

The chargeable gain becomes £120,000 - £80,000 = £40,000.