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HMRC internal manual

Venture Capital Schemes Manual

EIS: disposal relief: introduction

Gains arising on disposals of shares in an EIS company may not be chargeable to CGT. This relief is called exemption or disposal relief in this guidance. It applies only to shares attracting EIS Income Tax relief.

The EIS disposal relief legislation is at TCGA92/S150A and TCGA92/S150B. The principal features of the scheme are:

  • Gains on the disposal of EIS shares acquired within the annual investment limit that applies for Income Tax relief are exempt unless the Income Tax relief is reduced or withdrawn.
  • Losses on the disposal of EIS shares are allowable. The amount of the capital loss is reduced by the amount of the Income Tax relief still attributable to the shares disposed of.
  • Capital losses arising from certain disposals of EIS shares can be set against income.
  • The ordinary share pooling and identification rules do not apply. Instead the EIS share identification rules are used.