VCM40050 - Seed Enterprise Investment Scheme (SEIS): SEIS disposal relief: Income Tax relief restricted: example
TCGA92/S150E (4) and (5)
- December 2023 an investor subscribes £250,000 for 100,000 shares in a SEIS company.
- Maximum Income Tax relief of £100,000 is given in the tax year 2023-24.
- January 2028 all the shares are sold for £370,000.
The chargeable gain before any exemption is calculated:
|
Description |
Amount |
|
Disposal proceeds |
£370,000 |
|
Less cost |
£250,000 |
|
Chargeable gain |
£120,000 |
The TCGA92/S150E(5) formula is:
R = Amount of Income Tax Relief = £100,000
T Subscription x SEIS rate (50%) £125,000
Only a part of the gain is treated as CGT-exempt. The exemption is restricted to:
£120,000 x 100,000/125,000 = £96,000
The chargeable gain becomes £120,000 - £96,000 = £24,000.