Conditions to be met by the EIS investor
In summary, tax reliefs under the enterprise investment scheme (EIS) are as follows:
- income tax relief for the investor of up to 30% of the amount invested
- disposals of EIS shares after three years may be free from CGT
- capital gains deferral relief allows investors disposing of any asset to defer gains against subscriptions in EIS shares
- losses on EIS shares may be offset against taxable income
- EIS investments should qualify for IHT business property relief after two years' ownership
EIS reliefs are available to individuals only, with the exception of EIS deferral relief which is also available to trustees. TCGA 1992, Sch 5B, para 17
EIS reliefs are available to UK residents only, with the exception of income tax relief and relief for capital losses against income, which may be claimed by non-UK residents with a UK income tax liability.
With the exception of EIS deferral relief, EIS reliefs are available only to outside investors.
Note that a sunset clause for EIS income tax relief has been introduced. This ensures that income tax relief will no longer be given to subscriptions made on or after 6 April 2025, unless the legislation is renewed by Treasury Order. ITA 2007, s 157(1)(aa), (1A)