EIS—circumstances in which relief is withdrawn or reduced

Published by a LexisNexis Tax expert
Practice notes

EIS—circumstances in which relief is withdrawn or reduced

Published by a LexisNexis Tax expert

Practice notes
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The Enterprise Investment Scheme (EIS) is designed to encourage investment in smaller, higher-risk trading companies by offering a range of tax reliefs to individual investors purchasing newly issued shares in those companies.

For full details of these tax reliefs, see Practice Note: EIS—introduction to regime and description of tax reliefs. In summary, these reliefs include:

  1. income tax relief at 30% of the amount invested up to an annual investment limit of £1m (or up to £2m provided at least £1m is invested in shares in a knowledge-intensive company (KIC)) (subject to clawback if the shares are disposed of within three years)

  2. capital gains tax (CGT) exemption on any capital gain realised on a disposal of shares that qualified for EIS relief and were held for three years, and

  3. CGT deferral relief allowing an investor to defer tax on capital gains realised on disposal of assets to the extent that gains are reinvested in shares qualifying for EIS relief

When advising upon the availability of EIS tax relief it is essential

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Jurisdiction(s):
United Kingdom
Key definition:
Investors definition
What does Investors mean?

The investors in a equity'>private equity fund, who will be mainly institutional investors. Typical investors will include pension funds, sovereign wealth funds, funds of funds and university endowments although high net worth individuals and family offices may also invest. The investors will be the limited partners in a limited partnership fund.

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