Income Tax Act 2007 section 257MND

Limit on investment in shorter applicable period

Section 257MND imposes a £1.5 million cap on total relevant investments made in a social enterprise during the shorter applicable period, where the enterprise acquires a subsidiary or a trade that has previously received qualifying investment.

• Where a social enterprise acquires a 51% subsidiary or a transferred trade during the shorter applicable period, and investment money is used for a trade carried on by that subsidiary or transferred trade, a £1.5 million investment cap applies.
• The £1.5 million limit counts not only direct investments in the social enterprise but also investments previously made in companies that are or were 51% subsidiaries, and investments linked to trades that have become transferred trades.
• Investments made in a company before it became a 51% subsidiary count towards the cap, but investments made after a company ceased to be a subsidiary are excluded if it is no longer a subsidiary at the relevant time.
• Where only a proportion of the money raised by an investment was used for a trade that became a transferred trade, only the corresponding proportion of that investment counts towards the £1.5 million limit.