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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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Seed Enterprise Investment Scheme (SEIS): SEIS disposal relief: income tax relief reduced: example 1

TCGA92/S150F (2)

In this example TCGA92/S150E(2) applies but TCGA92/S150E(5) does not.

  • December 2012 investor subscribes £100,000 for 100,000 shares in a SEIS company. Maximum Income Tax relief of £50,000 is given in the tax year 2012-13 applying the SEIS rate 50%.
  • January 2014 the investor receives £20,000 value from the company. The Income Tax relief is reduced by £10,000 by making an assessment.
  • January 2018 all the shares are sold for £270,000.

The chargeable gain before any exemption under section 150E(2) is calculated:

Disposal proceeds £270,000
   
Less cost £100,000
Chargeable gain £170,000

The exemption applies only to the gain remaining after deducting the following amount:

Chargeable gain x Reduction in relief
     
    Relief attributable to shares before the reduction
£170,000 x £10,000 = £34,000
         
    £50,000    

£136,000 of the gain is exempt and £34,000 remains chargeable.