VCM31300 - EIS disposal relief: part-disposal: example

  • July 1996 an investor subscribes £100,000 for 100,000 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 25,000 shares for £10,000. Income Tax relief of £2,000 is withdrawn, (£10,000 x 20%), see VCM26070 example 2. Income Tax relief of £3,000 attributable to the shares sold is not withdrawn. The allowable loss is calculated as below.
Disposal proceeds£10,000
Less cost£25,000
Reduced by Income Tax relief*£3,000£22,000
Allowable loss£(12,000)

*This is the EIS Income Tax relief not withdrawn which remains attributable to the shares sold.