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HMRC internal manual

Venture Capital Schemes Manual

HM Revenue & Customs
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EIS: income tax relief: supplementary and general: nominees and bare trustees


Reliefs under the EIS may be available where an individual subscribes for shares, and holds them, through a nominee. This facilitates the use of investment funds, which enable money pooled by a number of investors to be subscribed for shares in a range of companies, the investments being held in the name of a nominee.

For income tax relief the general rule, in ITA07/S157(1), is that to be eligible for the relief an individual must subscribe for shares on his or her own behalf. But it is provided in ITA07/S250(1) that shares subscribed for, issued to, held by or disposed of for an individual by a nominee are to be treated as subscribed for, issued to, etc, that individual.

The company, which may or may not know who the beneficial owner is to be, should enter the name of the actual subscriber on the form EIS3.

Joint subscriptions - ITA07/S250(2)

Where shares are subscribed for jointly, each of the owners is to be treated as having subscribed an equal amount in respect of those shares. So if spouses or civil partners each subscribe £5000 for 5000 shares and the shares are registered in their joint names they are each treated as having subscribed £2500 for 5000 shares and each is entitled to relief on £2500. This is the case even if all of the funds were provided by one of them.Note that the exception in ITA07/S250 does not go far enough to enable investors to obtain income tax relief if they invest in a partnership which in turn invests in shares (including a limited partnership and a limited liability partnership). This is because rather than having individual ownership of the shares, the individual will instead own a proportion of all the assets, including shares, owned by the partnership (as will all the other partners in the partnership).

See also VCM10520.