Income Tax Act 2007 section 257FD

Put options

Section 257FD requires the withdrawal of SEIS income tax relief where a put option is granted over the relevant shares during the restricted period known as period A.

• If anyone grants the investor a put option during period A that would oblige the grantor to buy any of the relevant shares, the relief must be withdrawn
• A put option gives the investor the right to force the grantor to purchase shares at a predetermined price, effectively providing a guaranteed exit
• All SEIS relief attributable to the shares covered by the option must be withdrawn in full
• The shares covered by the option are determined by assuming the option is exercised immediately after grant and any later-acquired shares in the same company are disposed of first