VCM25440 - Enterprise Investment Scheme (EIS): Income Tax relief: Investments made through an approved investment fund

ICTA/S311 (2B); ITA/S251

If the investment is made through the medium of an approved investment fund (see VCM21510):

• the £500 minimum investment requirement (see VCM25420) does not apply, and
• provided 90% of the money contributed to the fund is invested within 12 months after the date the fund closes (6 months for funds which closed before 6 October 2006), the date when the investment is made is treated, for the purpose of the claim to income tax relief, as being the date when the fund closed. This will always be earlier than the actual investments, and may in some cases be in a previous tax year.

For shares issued in the tax year 2009/10 or later

Subject to the same 90% rule as above, if the shares subscribed for are issued in the same tax year as that in which the fund closes, the investor may elect to have some or all of the relief in the preceding tax year (see VCM25410)

Example 1

Mrs Han invests £100,000 via an approved investment fund which closes on 10 March 2010. All of her money is invested in shares which are issued on 15 April 2010. Mrs Han can have relief in the year in which the fund closed, 2009/10.

Example 2

Mr McDonald invests £20,000 via an approved investment fund which closes on 10 March 2010. All of his money is invested in shares which are issued on 5 April 2010. Mr McDonald can elect to have his relief in 2008/09, the tax year preceding that in which the fund closed.

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

The option to treat part of the investment as having been issued in the previous year (see VCM25410 and VCM25480) is available to investors through approved investment funds where the closing date of the fund is before 6 October in any year.