VCM45080 | Seed Enterprise Investment Scheme (SEIS): re-investment relief: reduction in income tax relief attributable to shares before re-investment relief obtained: example

In 2024-25 an individual investor carries out the following transactions:

• He disposes of a property under an unconditional contract dated 1 May 2024 giving rise to an agreed chargeable gain of £150,000

• 1 June 2024 he subscribes £200,000 for 200,000 ordinary shares in a SEIS company.

• 1 December 2024 he receives £40,000 value from the company.

Later he claims SEIS Income Tax relief and CG re-investment relief in respect of his subscription

Based upon the £200,000 subscription the investor would have been eligible for maximum Income Tax relief £100,000 in 2024-25. After reduction in respect of the earlier value received, he obtains relief £160,000.

Of the £200,000 subscribed for the shares the amount that may be matched with the chargeable gain is limited to

200,000 x £160,000 = £160.000

£200,000

Re-investment relief is then half of this amount, £80,000

The chargeable gain on the property is reduced to £70,000.

Had the transactions been carried out instead in 2012-13, the amount subscribed for SEIS shares that could be matched with the chargeable gain would again be limited to £80,000. After re-investment relief of £80,000 (see VCM45020) the gain on the property would be reduced to £70,000.