VCM21500 - EIS: general: investment funds: nominee holdings

ICTA/S311 (1); ITA/S250

Reliefs under the EIS may be available where an individual subscribes for shares, and holds them, through a nominee. This facilitates the use of investment funds, which enable money pooled by a number of investors to be subscribed for shares in a range of companies, the investments being held in the name of a nominee.

For income tax relief the general rule, in ICTA/S291 (1) and ITA/S157 (1), is that to be eligible for the relief an individual must subscribe for shares on his or her own behalf. But it is provided in ICTA/S311 (1) and ITA/S250 (1) that shares subscribed for, issued to, held by or disposed of for an individual by a nominee are to be treated as subscribed for, issued to, etc, that individual.

Note that the exception in ICTA/S311 and ITA/S250 does not go far enough to enable investors to obtain income tax relief if they invest through a partnership (including a limited partnership and a limited liability partnership).