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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: bonus issues

If a company makes an issue of shares to its shareholders for no payment, this is called a bonus issue. As long as the issue is made in respect of and in proportion to the existing shares TCGA92/S127 will apply to treat all the shares (original and bonus) as though they were the same asset, see CG50290.

If the original shares attracted EIS Income Tax relief the bonus issue shares are treated as if they were acquired at the same time as the original shares and as if they attracted Income Tax relief. Therefore there is no need to distinguish between original and bonus shares when dealing with a disposal or part disposal. If all the shares are sold you should treat all the shares as having had Income Tax relief. If there is a part disposal you should treat the corresponding proportion of the shares as having had Income Tax relief.