PT9 Tax Reducers Flashcards
Certain reliefs are given as a deduction from income tax and are called tax reducers. Name them!
ENTERPRISE INVESTMENT SCHEME (EIS)
SEED ENTERPRISE INVESTMENT SCHEME (SEIS)
SOCIAL INVESTMENT TAX RELIEF (SITR)
VENTURE CAPITAL TRUSTS (VCTs)
MARRIED COUPLE’S ALLOWANCE
EIS relief:
If a taxpayer subscribes for EIS shares, a tax reducer is given, being a percentage of the lower of:
* the amount invested; or
* £1 million.
The £1 million maximum increases to £2 million where shares are subscribed for in knowledge intensive companies. In this case, the maximum that can be subscribed for
shares in companies which are not knowledge intensive is £1 million.
For 2022/23, the percentage is 30%.
SEIS relief:
If a taxpayer subscribes for SEIS shares, a tax reducer is given, being a percentage of the lower of:
* the amount invested; or
* £100,000.
For 2022/23, the percentage is 50%.
Social investment Tax Relief:
If a taxpayer subscribes for shares or makes a qualifying debt investment in a social enterprise, a tax reducer is given, being a percentage of the lower of:
* the amount invested; or
* £1 million.
For 2022/23, the percentage is 30%.
Venture Capital Trust Relief:
If a taxpayer subscribes for VCT shares, a tax reducer is given, being a percentage of the
lower of:
* the amount invested; or
* £200,000.
For 2022/23, the percentage is 30%
The order of priority for tax relief:
Where there is more than one tax reducer, the order in which they are deducted is VCT,EIS, SEIS, SITR, and finally the MCA or the MA.
Married Couples allowance excess…
Excess MCA tax reducers may be transferred to the wife/lower earning partner at the end of the tax year to prevent them going to waste.
Alternatively, claims can be made to allocate either half or all of the minimum MCA tax reducer (£3,640 × 10%) to the wife/lower earner before the start of the tax year.
