Income Tax Act 2007 section 257LE

The no tax avoidance requirement

Section 257LE prevents an investment from qualifying for social investment tax relief where the investment is made as part of arrangements whose main purpose, or one of whose main purposes, is the avoidance of tax.

• An investment will not qualify for relief if it forms part of any arrangements designed to avoid tax.
• The test applies where tax avoidance is the main purpose or one of the main purposes of the arrangements.
• The requirement looks at the wider arrangements surrounding the investment, not just the investment itself.
• This is an anti-avoidance safeguard to ensure the relief is used for genuine social investment purposes.