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HMRC internal manual

Venture Capital Schemes Manual

EIS: disposal relief: TCGA92/S150B(2): example

In this example TCGA92/S150A(2) applies but TCGA92/S150A(3) does not.

  • July 2008 investor subscribes £500,000 for 100,000 shares in an EIS company. Maximum Income Tax relief of £100,000 is given in the tax year 2009-09.
  • August 2010 the investor receives value from the company and as a consequence the Income Tax relief is reduced by £20,000 by making an assessment.
  • January 2013 all the shares are sold for £650,000.

The chargeable gain is calculated as below.

Disposal proceeds £650,000
Less cost £500,000
Chargeable gain £150,000

The exemption is reduced by the following amount:

Chargeable gain X Reduction in relief
    Relief attributable to shares before the reduction
£150,000 x £20,000 = £30,000

£120,000 of the gain is exempt and £30,000 is chargeable.