Taxation of Chargeable Gains Act 1992 section 255D

Application of section 255B(2) where SI relief has been reduced

Section 255D limits the capital gains tax exemption on disposals of social enterprise investments where the Social Investment (SI) income tax relief originally given has subsequently been reduced.

• Where SI relief has been reduced (for example, because the investor received value from the social enterprise or the investment was repaid or redeemed), the CGT exemption on disposal is restricted proportionately to reflect only the relief that remains unreduced.
• If the investor originally claimed the maximum available SI relief, the exempt portion of the gain equals the gain multiplied by the fraction of the original relief that has not been withdrawn — the remainder of the gain is chargeable.
• If the investor originally claimed less than the maximum SI relief (so that section 255C already restricts the exempt gain), the further reduction for withdrawn relief is applied to the already-restricted gain rather than to the full gain.
• Where SI relief has been reduced on more than one occasion, all the individual reductions are aggregated for the purposes of the calculation, and the original SI relief figure used as the denominator is always the relief as first given, before any reductions.