VCM40050 - Seed Enterprise Investment Scheme (SEIS): SEIS disposal relief: Income Tax relief restricted: example
TCGA92/S150E (4) and (5)
- December 2012 an investor subscribes 拢150,000 for 100,000 shares in a SEIS company.
- Maximum Income Tax relief of 拢50,000 is given in the tax year 2012-13.
- January 2017 all the shares are sold for 拢270,000.
The chargeable gain before any exemption is calculated:
| Description | Amount |
|---|---|
| Disposal proceeds | 拢270,000 |
| Less cost | 拢150,000 |
| Chargeable gain | 拢120,000 |
The TCGA92/S150E(5) formula is:
R = Amount of Income Tax Relief = 拢50,000
T Subscription x SEIS rate (50%) 拢75,000
Only a part of the gain is treated as CGT-exempt. The exemption is restricted to:
拢120,000 x 2 / 3 = 拢80,000
The chargeable gain becomes 拢120,000 - 拢80,000 = 拢40,000.