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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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EIS: disposal relief: losses: example

  • June 2008 an investor subscribes £100,000 for 50,000 shares in an EIS company. Income Tax relief of £20,000 is given in 2008-09, as the EIS rate is 20%.
  • January 2013 the investor sells all 50,000 shares for £60,000. Income Tax relief of £12,000 on the £60,000 is withdrawn (£60,000 x 20%, the EIS original rate). Income Tax relief of £8,000 is not withdrawn and remains attributable to the shares sold. The allowable loss is calculated as below.
Disposal proceeds   £ 60,000
     
Less cost £100,000  
Reduced by Income Tax relief* £    8,000 £ 92,000
Allowable loss   £(32,000)

*This is the EIS Income Tax relief not withdrawn which remains attributable to the shares sold.