EIS: income tax relief: supplementary and general: approved investment fund as nominee
The managers of an investment fund may, if they wish, apply for the fund to be approved by HMRC. Approval carries certain limited advantages, which apply in relation to income tax relief only. They are that:
- the £500 minimum subscription applicable before 6 April 2012 (see VCM10520) does not apply,
- provided 90% of the fund is invested within 12 months after the date when the invitation to participate in the fund closes, (6 months for funds which closed before 6 October 2006) the shares are regarded as issued on the closing date. This will always be earlier than the actual investments, and may in some cases by in a previous tax year.
The Guidelines for the Approval of EIS Investment Funds explain the criteria that determine whether a fund can be approved.
Anyone wishing to enquire about the circumstances in which approval may be given should contact CTIAA (CT Structure, Incentives & Reliefs team), either in writing to
100 Parliament Street
or by telephone on 020 7147 2589 or 020 7147 0818 or 020 7147 0083.
Where the managers of an approved fund subscribe for shares on behalf of the participants in the fund, the individual participants remain responsible for making their own claims to relief. A single form EIS3 will be issued by each qualifying company to the managers of the fund, who will then supply the participants with certificates on form EIS5.
The managers use form EIS5, which is supplied to them by CTIAA (CT Structure, Incentives & Reliefs team), to certify to each participant that they hold certificates of relief on forms EIS3 relating to subscriptions for shares in the companies listed on that form and to notify the number of shares held on behalf of that participant. Participants can then use the forms EIS5 to claim relief.
Investments made through an approved investment fund
For shares issued in the tax year 2009/10 or later
Subject to the same 90% rule as above, if the shares subscribed for are issued in the same tax year as that in which the fund closes, the investor may elect to have some or all of the relief in the preceding tax year (see VCM10530)
Mrs Han invests £100,000 via an approved investment fund which closes on 10 March 2010. All of her money is invested in shares which are issued on 15 April 2010. Mrs Han can have relief in the year in which the fund closed, 2009/10.
Mr McDonald invests £20,000 via an approved investment fund which closes on 10 March 2010. All of his money is invested in shares which are issued on 5 April 2010. Mr McDonald can elect to have his relief in 2008/09, the tax year preceding that in which the fund closed.
For shares issued up to and including tax year 2008/09
The option to treat part of the investment as having been issued in the previous year (see VCM10530) is available to investors through approved investment funds where the closing date of the fund is before 6 October in any year.