Income Tax Act 2007 section 257QN

Single issue treated as made partly in previous tax year

Section 257QN explains how to calculate the reduction in Social Investment (SI) relief when a single share issue has been split across two tax years — that is, where part of the issue was treated as made in the previous tax year under a carry-back claim.

• This section applies where SI relief is being withdrawn or reduced because of a repayment of share capital to other persons, and part of the share issue was treated as issued in a previous tax year under a carry-back claim
• The repayment amount must first be split between the two tax years in proportion to the SI relief obtained in each year, using the fraction I/T where I is the relief for the year in question and T is the total relief across both years
• For each tax year's apportioned amount, the reduction is calculated separately as though there were two independent share issues — applying the rules for maximum relief not obtained if relevant, but ignoring the rules for multiple share issues or multiple individuals
• The two separate reduction amounts are then added together to give the total amount by which SI relief must be reduced