VCM40130 - Seed Enterprise Investment Scheme (SEIS): SEIS disposal relief: identification of disposals
TCGA92/S150E (6) and (7)
There is no pooling of shares that have attracted SEIS relief and the ordinary share identification rules do not apply. Instead for determining whether a disposal relates to shares to which SEIS Income Tax relief is attributable and, if so, which, the Income Tax rules in ITA07/S257HAapply. Disposals are identified first against the earliest acquisition. For same day acquisitions the order of disposal is set out at ITA07/S257HA(3), see VCM37020.
Example
An investor subscribed £20,000 for 20,000 new shares in a SEIS company. These shares were issued to her on 1 December 2012 and were the only shares in a SEIS company issued to her in 2012-13. She claimed Income Tax relief on all £20,000.
On 1 July 2014 she bought a further 15,000 shares from a third party for £15,000. These shares did not attract any SEIS reliefs.
On 1 January 2016 the taxpayer sold 25,000 shares for £50,000.
For CGT purposes the taxpayer has two separate blocks of shares in the SEIS company.
- 20,000 shares acquired 1 December 2012 any gain on the disposal of which after three years is not chargeable.
- 15,000 shares acquired on 1 July 2014 which are not exempt. These form a single asset, the Section 104 holding, see CG/APP10
The shares sold on 1 January 2016 are identified:
- firstly with the 20,000 shares issued on 1 December 2012. As these have been held for more than 3 years no chargeable gain arises on their disposal, and
- secondly with 5000 of the shares from the Section 104 holding. The chargeable gain is calculated:
Disposal proceeds (5,000 non-exempt shares) £10,000
Less cost £15,000 x 5,000
15,000 = £5,000
Chargeable gain = £5,000
Examples involving the disposal of shares that were acquired on the same day are at VCM45140.