Entrepreneurs' Relief

To obtain the tax reliefs described below, it is necessary to subscribe for shares in EIS qualifying companies and where appropriate to claim the relief. The summary below is based on current law and gives only a brief outline of the tax reliefs. It does not set out all the rules which must be met by EIS qualifying companies and an investor. The ta... x reliefs will only be relevant to Investors who are liable to UK income tax and/or wish to defer a capital gain. EIS income tax relief for investments made after 05 April 2018 can be claimed in the 2018/2019 tax year or can be carried back to the 2017/2018 tax year. Individuals can obtain 30% income tax relief on the amount subscribed for shares in EIS qualifying companies (up to an annual maximum £1 million for the 2018/19 tax year), although relief will be denied for investment into an EIS qualifying company with which the individual is connected. As announced in the Autumn Budget 2017, for shares issued on or after 06 April 2018, the maximum annual investment limit has increased to £2 million provided that any amount over £1 million is invested in one or more knowledge-intensive companies. Spouses and civil partners can each separately subscribe up to £1 million. The relief is given against the individuals income tax liability for the tax year in which the shares are issued unless the individual makes a carry back relief claim. Relief is limited to an amount that reduces the investors income tax liability for the year to nil. Carry back relief claims may be made for amounts subscribed for shares in EIS qualifying companies, such that an investment is treated for tax relief purposes as having been made in the tax year before the tax year in which the investment was actually made. In effect, and provided no 2017/18 EIS investments have already been made, this allows an investor to invest up to £2 million in 2018/19 and claim full tax relief. To the extent to which a UK resident investor (including individuals and certain trustees) subscribes for shares, he can ...Read More