VCM25300 - EIS: income tax relief: eligibility for relief

An individual is not eligible for relief in the following circumstances:

• where the subscription was not made for commercial reasons, or was made as part of a scheme to avoid tax (see VCM12140 and VCM12150),
• where the issue of the shares was not made for commercial reasons, or was made as part of a scheme to avoid tax (see VCM12060),
• where a loan is linked with the investment (see VCM20050),
• where there was an arrangement to reduce the risk of the investment (see VCM20060).
• where for any reason relief would, if it had been obtained already, have had to be withdrawn - see ICTA/S312 (4).and ITA/S257 (4).

Relief can only be given on subscriptions up to a certain amount in any one year of assessment (see VCM25430).

In addition, no relief is due to an individual in the following circumstances:

• where the individual has an option (a 'put' option) on the exercise of which someone else would be bound to purchase the shares,
• where the amount subscribed for shares in any one company issued in a year is less than £500 (see VCM25420),
• where the subscription is 'replacement capital' (see VCM25310).