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Finance Act 2012

Chapter 1 of New Part 5A of ITA

3.New section 257A defines SEIS income tax relief and provides that it will apply to shares issued on or after 6 April 2012 and before 6 April 2017. The new scheme is therefore of fixed length, but can be extended by a Treasury order.

4.New section 257AA provides that an investor is eligible for relief in respect of shares issued to him or her where particular requirements are met. There are requirements which apply to the investor, general requirements, and requirements that apply to the issuing company. These requirements are in Chapters 2 – 4 of new Part 5A.

5.New section 257AB provides that the relief is a reduction of income tax calculated as 50 per cent of the amount the investor subscribes for shares, subject to an overall limit of 50 per cent of £100,000 on the amount of relief that can be received in any one year.

6.New section 257AB(5) allows an investment or part of an investment made in one year to be treated as though made in the previous year (but not in the first year that the new scheme operates), subject to the overall limit for a year.

7.New section 257AC defines two periods of time with respect to which many of the SEIS conditions operate. Period A runs from the company’s incorporation to the third anniversary of the share issue (defined at new section 257AC(4) as the “termination date”). Period B runs from the issue of the shares to the termination date.

8.New section 257AD is an overview of chapters 5 – 8 of new Part 5A, which deal with the making of claims, withdrawal of relief, and supplementary matters.

9.New section 257AE(1) mentions new Section 150E of the Taxation of Chargeable Gains Act 1992 (TCGA), which provides a relief from capital gains tax (CGT) on gains on shares which qualify for SEIS relief (see paragraphs 93 below).

10.New section 257AE(2) mentions new Schedule 5BB TCGA, which provides relief from CGT on the disposal of assets where the proceeds are reinvested under SEIS (see paragraphs 97 to 108 below).

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