VCM31050 - EIS disposal relief: losses:
example
- June 1996 an investor subscribes
£100,000 for 50,000 shares in an EIS company. Income Tax
relief of £20,000 is given in 1996-97, as the lower rate of
tax is 20%.
- January 2000 the investor sells all 50,000
shares for £60,000. Income Tax relief of £12,000 on the
£60,000 is withdrawn (£60,000 x 20%), see
VCM26100 example 1. Income Tax relief of
£8,000 is not withdrawn and remains attributable to the shares
sold. The allowable loss is calculated as below.
| Disposal proceeds | | £60,000 |
| Less cost | £100,000 | |
| Reduced by Income Tax
relief* | £8,000 | £92,000 |
| Allowable loss | | £(32,000) |
*This is the EIS Income Tax relief not withdrawn which remains
attributable to the shares sold.
