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:
| Description | Amount |
|---|---|
| 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.