What does section 257QB of the Income Tax Act 2007 do?

Section 257QB adjusts the calculation of value received from a social enterprise where an investor holds multiple Social Investment relief investments with overlapping longer applicable periods. It apportions the value proportionately across all overlapping investments using the fraction I/T, preventing the same receipt from triggering disproportionate withdrawal of SI relief across multiple investments.

How is the apportionment fraction I/T calculated under section 257QB?

In the fraction I/T, I represents the amount on which the investor obtained SI relief for the particular investment being considered. T is the total of that amount plus the corresponding SI relief amounts for all overlapping investments. The value received (V) is multiplied by this fraction to determine the amount attributed to each investment.

What is an overlapping investment for the purposes of section 257QB?

An overlapping investment is any other investment in the same social enterprise for which the investor has claimed SI relief and whose longer applicable period overlaps with the longer applicable period of the investment in question. All such overlapping investments are included in the denominator T when calculating the apportionment fraction.

Can you give a practical example of how section 257QB apportions value received?

If an investor holds two SI relief investments of £40,000 and £60,000 in the same social enterprise with overlapping periods and receives £10,000 in value, the first investment is allocated £4,000 (£10,000 × 40,000/100,000) and the second £6,000 (£10,000 × 60,000/100,000), ensuring proportionate allocation with no double counting.

Income Tax Act 2007 section 257QB

Value received where there is more than one issue of investments

Section 257QB adjusts the calculation of value received from a social enterprise where the investor holds more than one investment attracting Social Investment (SI) relief and their longer applicable periods overlap.

Where an investor holds multiple SI relief investments in the same social enterprise with overlapping longer applicable periods, the value received must be apportioned between them
Any other investment in the same social enterprise for which the investor has SI relief, and whose longer applicable period overlaps, is called an "overlapping investment"
The amount of value received (V) used in the section 257Q(2) calculation is reduced by multiplying it by the fraction I divided by T
In this fraction, I is the amount on which SI relief is given for the investment in question, and T is the total of that amount plus the corresponding amounts for all overlapping investments

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