Income Tax Act 2007 section 257Q

Effect of the investor receiving value from the social enterprise

Section 257Q sets out what happens to social investment (SI) tax relief when an investor receives value back from the social enterprise during the longer applicable period.

• If value is received from the social enterprise during the longer applicable period, SI relief must be reduced or withdrawn entirely depending on the amount involved
• The reduction amount is calculated as V × R, where V is the value received and R is the SI relief rate for the relevant tax year
• Several exceptions and modifications apply, including rules for insignificant receipts, multiple investment issues, cases where maximum relief was not obtained, receipts involving connected persons, and receipt of replacement value
• A spouse or civil partner who acquires any part of the investment by transfer is treated as the original investor for these purposes