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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: part-disposal: example

  • July 2010 an investor subscribes £100,000 for 100,000 shares in an EIS company. Income Tax relief of £20,000 is given in 2010-11 as the EIS rate is 20%.
  • January 2012 the investor sells 25,000 shares for £10,000. Income Tax relief of £2,000 is withdrawn, (£10,000 x 20%, the EIS original rate). Income Tax relief of £3,000 attributable to the shares sold is not withdrawn. The allowable loss is calculated as below.
Disposal proceeds   £ 10,000
     
Less cost £25,000  
Reduced by Income Tax relief* £ 3,000 £ 22,000
Allowable loss   £(12,000)

*This is the EIS Income Tax relief not withdrawn which remains attributable to the 25,000 shares sold.