Income Tax Act 2007 section 257LG

The requirement not to be interested in capital etc of social enterprise

Section 257LG prevents an investor (and their associates) from qualifying for Social Investment Tax Relief if they hold too great an interest in the capital or control of the social enterprise, or any of its 51% subsidiaries, during the longer applicable period.

• Neither the investor nor any associate may have control of the social enterprise or any related company (a 51% subsidiary at any point in the longer applicable period) at any time during that period.
• Neither the investor nor any associate may directly or indirectly possess or be entitled to acquire more than 30% of the ordinary share capital, loan capital, or voting power in any related company during the longer applicable period.
• Shares held in a related company are disregarded where that company has issued only subscriber shares and has not yet begun to carry on, or prepare to carry on, any trade or business.
• Loan capital is broadly defined to include most debts incurred by the company (other than ordinary bank overdrafts), and any future rights to acquire interests, as well as the rights of associates, are attributed to the individual.