A: An individual receives tax relief in their income tax computation when they subscribe for shares in a qualifying EIS company. HMRC defines ‘subscribing for shares’ when a company is issuing new shares to the investor. ITA 2007, s.158.
Tax relief is available in respect of the lower of the amount subscribed or £1 million, unless the company is a knowledge intensive company. ITA 2007, s.158(2).
So, if shares valued at £100k are subscribed for, the taxpayer will be entitled to claim tax relief on this amount. The fact that £500 will be share capital and £99,500 share premium does not affect this.
These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.
About Markel Tax
Markel Tax offers expert advice on UK tax and VAT via its helpline and provides monthly FAQs with questions and answers on common tax issues for businesses and practitioners.