VCM25410 - Enterprise Investment Scheme (EIS): Income Tax relief: Year for which relief is due

ICTA/S289A (1); ITA/S158 (1)

The relief is available for the year of assessment in which the shares are issued (the claimant can find the date of issue recorded on the company's certificate on form EIS3). However, there are two situations in which shares may be treated as issued on some earlier date. The rules relating to the carry back of relief changed with effect from 2009/10.

• In certain cases where the subscription is made through the medium of an approved investment fund (see VCM21510andVCM25440), the shares are treated as issued on the date when the fund closes.

For shares issued in tax year 2009/10 and later years

• The investor may claim to have some or all of the relief in the year preceding that in which the shares were issued. There is no limit on the amount which may be carried back, but the relief available in the earlier tax year will be subject to the overriding limit for relief for that year (see VCM25430).

Example

Mr Shah subscribes £750,000 for shares issued on 10 October 2009. He has already had relief of £100,000 in 2008/09, and the maximum relief available for that year is £500,000, so he elects to carry back £400,000 to 2008/09. He uses the balance of £350,000 in 2009/10.

For shares issued up to and including tax year 2008/09

• Where the shares are issued before 6 October in any year of assessment, the individual can treat up to half of those shares as having been issued in the previous year. But the total amount which can be treated in this way for any year is limited to:
• £25,000 for years up to and including 2005-06,
• £50,000 for 2006-07 and later years.

Any repayment supplement (RPS) relating to a repayment arising from such a carry-back of relief will run from the year of assessment in point, rather than from the year of assessment in which the shares were subscribed for.

Example

Mrs Higgins subscribes £500,000 for shares issued on 4 July 2006, so she obtains relief on £400,000 for 2006-07 only and there is an excess of £100,000. For 2005-2006 she has already had relief on £60,000. Although that is £140,000 less than the maximum for that year, the amount she can regard as relating to shares issued in that year is limited to £50,000, and she cannot get relief on the remaining £50,000.

See VCM25480 for details of how to claim for an earlier year.