EIS Income Tax Relief

📘 Overview

This guide explains how to claim Income Tax relief under the Enterprise Investment Scheme (EIS) once you have received your EIS3 compliance certificate.

✅ How to Claim the Relief

There are two ways to claim your EIS Income Tax relief:

1. Through your Self Assessment tax return
2. By completing the EIS3 compliance certificate claim form

💡 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

1. Go to page Ai2 of the Additional Information pages.

2. In the ‘Other tax reliefs’ section, box 2, enter the total amount of subscriptions you’re claiming relief on.

   Include any amount for which you’ve already received relief via:

   • An increase in your PAYE tax code, or
   • A reduction in payments on account.
3. Exclude any amount you’re 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 ‘Any other information’ 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 you’ve subscribed more than £1 million (or £2 million for KICs), specify how you want the relief attributed between investments

💡 Tip:

Keep your EIS3 certificate safe, HMRC may request it as supporting evidence.

When You Can’t Claim Yet

If your shares were issued during the year but you haven’t 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.

🔍 Claiming Through the EIS3 Compliance Certificate

The EIS3 form consists of four pages:

1. Certificate confirming your investment
2. Notes explaining how to claim income tax and CGT deferral relief
3. EIS claim form – investment and claim details
4. EIS claim form – 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:

📮 HMRC, PAYE & Self Assessment, BX9 1AS

Checking HMRC’s Response

If you haven’t heard back from HMRC within 30 days, you can:

• 🔗 Check current response times on HMRC’s website
• Contact them using the options listed on the same page if the estimated response time has passed.

💡 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 year’s investment limit.

You’ll find the date of issue on your EIS3 certificate.

📊 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 isn’t high enough to absorb the full relief, the unused portion is lost, it cannot be carried forward.

✅ Summary