EIS Income Tax Relief
š Overview
This guide explains how to claim Income Tax relief under the Enterprise Investment Scheme (EIS) once you have received your EIS3 compliance certificate.
ā How to Claim the Relief
There are two ways to claim your EIS Income Tax relief:
- Through your Self Assessment tax return
- By completing the EIS3 compliance certificate claim form
š” Claiming Through Your Tax Return
You can claim your EIS relief on your Self Assessment return using the Additional Information pages (Ai2).
Step-by-step
- Go to page Ai2 of the Additional Information pages.
In the āOther tax reliefsā section, box 2, enter the total amount of subscriptions youāre claiming relief on.
Include any amount for which youāve already received relief via:
- An increase in your PAYE tax code, or
- A reduction in payments on account.
- Exclude any amount youāre carrying back for a previous tax year.
Key details
- The maximum investment on which relief can be claimed is £2 million.
- However, any amount above £1 million must be for shares in Knowledge Intensive Companies (KICs).
- Your EIS3 certificate will confirm if the company qualifies as a KIC.
Information to Include in Your Tax Return
You must enter details for each investment in the āAny other informationā box, box 19 on page TR7, including:
- The Unique Investment Reference (UIR) (from your EIS3)
- The name of the company invested in
- The amount on which relief is claimed
- The date of issue of the shares
- If youāve subscribed more than Ā£1 million (or Ā£2 million for KICs), specify how you want the relief attributed between investments
š” Tip:
Keep your EIS3 certificate safe, HMRC may request it as supporting evidence.
When You Canāt Claim Yet
If your shares were issued during the year but you havenāt yet received the EIS3, you must wait until the certificate is issued.
If you receive it after submitting your tax return, complete the claim form inside the EIS3 and send it directly to HMRC.
š Claiming Through the EIS3 Compliance Certificate
The EIS3 form consists of four pages:
- Certificate confirming your investment
- Notes explaining how to claim income tax and CGT deferral relief
- EIS claim form ā investment and claim details
- EIS claim form ā declaration
How to Complete It
- Use the details from page 1 to fill in pages 3 and 4.
- Refer to the notes on page 2 to decide how much Income Tax and/or CGT deferral relief to claim.
- Complete the declaration with your name, address, signature, and date.
Once completed, post the form to:
š® HMRC, PAYE & Self Assessment, BX9 1AS
Checking HMRCās Response
If you havenāt heard back from HMRC within 30 days, you can:
- š Check current response times on HMRCās website
- Contact them using the options listed on the same page if the estimated response time has passed.
š” Things to Consider
Joint Ownership of Shares
When shares are issued jointly (e.g. to a married couple):
- Each person is treated as if they subscribed half the total amount and number of shares.
- Both parties should receive their own EIS3 form from the company to claim relief.
Example:
If £2,000 is subscribed for 2,000 shares in joint names, each person is treated as having subscribed £1,000 for 2,000 shares, even if one person paid the full amount.
Claiming Relief for a Different Tax Year
By default, relief applies in the tax year the shares are issued.
However, you can choose to carry back all or part of your investment and claim it in the previous tax year, subject to that yearās investment limit.
Youāll find the date of issue on your EIS3 certificate.
š How Much Relief You Get
You can claim 30% relief on the total amount subscribed for shares issued in the tax year (after accounting for any carried-back claims).
Example
If you invest £100,000 in EIS shares, you can reduce your income tax bill by £30,000.
Limits
- You cannot claim relief on more than £2 million in total.
- Any investment above £1 million must be in Knowledge Intensive Companies (KICs).
- If your income tax liability isnāt high enough to absorb the full relief, the unused portion is lost, it cannot be carried forward.
ā Summary
Claim Method | How to Apply | Maximum Relief | Notes |
---|---|---|---|
Self Assessment | Enter details on Ai2 and TR7 pages | 30% of investment (up to £2m) | KICs required for >£1m |
EIS3 Form | Complete and post to HMRC | 30% of investment | Use if EIS3 is received after filing your return |