VCM26310 - EIS: income tax relief: value received: insignificant amount

ICTA/S301A; ITA/S214; ITA/S215

Where the amount of the value received is 'insignificant' it is ignored. An amount is insignificant for this purpose if:

• it does not exceed £1000, or
• if it exceeds £1000 it is insignificant in relation to the amount subscribed by the individual for the shares in question.

Our view is that for the purpose of the second category above 'insignificant' must be given its normal dictionary meaning of trifling or completely unimportant. Thus in most cases it is very unlikely to cover any amount in excess of £1000. Please refer to CT&VAT (Technical) if you are in any doubt.

Where there is more than one receipt which is, on its own, insignificant as defined, the rule must be applied to the total amount received within the period of restriction (ICTA)/Period C (ITA)(see VCM20600). For example, suppose an individual received value of £600 on 1 February 2002 and the same sum every three months thereafter. Assuming £1200 was not regarded as insignificant, the individual would be regarded as receiving value of £1200 on 1 May 2002, a further £1200 on 1 November 2002, and so on.

To ensure that this relaxation is not used for avoidance purposes, it is provided that the amount of any value shall not be regarded as insignificant if it is received under arrangements which exist at any time in the 12 months ending on the date of the share issue.