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

Section 257TE provides a reference glossary of key terms used throughout the Social Investment Tax Relief (SITR) provisions of United Kingdom law. It defines terms such as arrangements, bonus shares, director, disposal, group, and single company, and establishes the meaning of market value for all SITR purposes.

How is 'arrangements' defined for SITR purposes under section 257TE?

The term 'arrangements' is defined very broadly under section 257TE. It covers any scheme, arrangement, or understanding of any kind, whether or not it is legally enforceable, and whether it involves a single transaction or several. However, in sections 257LB and 257QK it carries more specific meanings relating to issuing and repayment arrangements respectively.

How is 'director' defined when the social enterprise is a charitable trust?

Under section 257TE, the definition of 'director' follows the Corporation Tax Act 2010 but is adapted for SITR. Where the social enterprise is a charity constituted as a trust, each trustee of that charitable trust is treated as a director, subject to the specific rules in section 257LF(9) regarding restrictions on being a paid director.

How is market value determined under the SITR provisions?

For all SITR purposes, the market value of any asset is the price it might reasonably be expected to fetch if sold on the open market at the relevant time. Any security interest or charge over the asset must be disregarded, meaning the asset is valued as though it were completely unencumbered.

Income Tax Act 2007 section 257TE

Minor definitions etc

Section 257TE provides a glossary of key terms used throughout the Social Investment Tax Relief provisions, together with a definition of market value for the purposes of those provisions.

Key terms such as "arrangements", "bonus shares", "director", "disposal", "group" and "single company" are defined for use throughout the Social Investment Tax Relief rules.
The definition of "director" is extended so that, where the social enterprise is a charitable trust, each trustee is treated as a director.
"Arrangements" is given a deliberately wide meaning, covering any scheme, understanding or arrangement — whether legally enforceable or not — involving one or more transactions.
Market value is defined as the price an asset might reasonably be expected to fetch on a sale in the open market, disregarding any security interest over it.

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