Income Tax Act 2007 section 257R

Disposal of whole or part of the investment

Section 257R deals with the consequences for seed enterprise investment scheme (SEIS) income tax relief when an investor disposes of all or part of their investment before the end of the shorter applicable period.

• If an investor sells or otherwise disposes of shares or qualifying debt investments before the shorter applicable period ends, and SEIS relief is attributable to those investments, the relief may be reduced or withdrawn entirely.
• Disposals to a spouse or civil partner living with the investor, and disposals occurring on the investor's death, are excluded from these withdrawal rules.
• Where the disposal is not at arm's length (i.e. not at fair market value), all SEIS relief attributable to the disposed investments must be withdrawn in full.
• Where the disposal is at arm's length, the relief is reduced by the formula C × R (consideration received multiplied by the SEIS rate for the relevant tax year), or withdrawn entirely if the relief is not greater than that calculated amount.