SolvedVCM40080 | Seed Enterprise Investment Scheme (SEIS): SEIS disposal relief: income tax relief reduced: example 1
From HM Revenue & Customs · Venture Capital Schemes Manual
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 for that year 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:
| Gain | Amount |
|---|---|
| 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
Chargeable gain £170,000 x £10,000 = £34,000
£50,000
£136,000 of the gain is exempt and £34,000 remains chargeable.