Income Tax Act 2007 section 257FH

When value is received

Section 257FH defines the circumstances in which an investor is treated as receiving value from a company for the purposes of the Seed Enterprise Investment Scheme (SEIS) relief rules, including what counts as value received and what payments are excluded.

• Value is received when the issuing company repays, redeems or repurchases share capital or securities, repays debts connected with the share acquisition, releases liabilities, makes loans or advances, provides benefits, transfers assets at non-market value, or makes other non-excluded payments to the investor
• Certain payments are excluded from the definition of value received, including reimbursement of directors' expenses, reasonable commercial interest, normal dividends, market-value payments for goods, reasonable commercial rent, and qualifying trade or professional remuneration
• Value is also received where a person with a substantial interest in the company, or an employee or director, purchases shares or securities from the investor or pays the investor for giving up rights to those shares or securities, or where the investor receives payments or assets on a qualifying winding up or dissolution
• Reasonable remuneration paid to the investor or their associate for services as a director (including where the person also serves as an employee) does not count as receiving value, and a disposal of shares that already triggers withdrawal or reduction of SEIS relief is not separately treated as receiving value