Q&As

If a non-UK resident individual invests in an EIS qualifying company in the UK, would any subsequent disposal by him, made while a non-UK resident, be subject to UK capital gains tax?

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Published on LexisPSL on 10/05/2017

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • If a non-UK resident individual invests in an EIS qualifying company in the UK, would any subsequent disposal by him, made while a non-UK resident, be subject to UK capital gains tax?

If a non-UK resident individual invests in an EIS qualifying company in the UK, would any subsequent disposal by him, made while a non-UK resident, be subject to UK capital gains tax?

The enterprise investment scheme (EIS) is designed to encourage investment in smaller, higher-risk trading companies by offering a range of tax reliefs to individual investors purchasing newly issued shares in those companies.

EIS allows unquoted companies (companies listed on AIM are unquoted for these purposes) that meet certain requirements to raise finance by issuing qualifying shares to qualifying investors. The EIS regime is prescriptive and sets out a number of requirements that must be met, including in relation to:

  1. the individual investors

  2. the issued shares, and

  3. the issuing company

In relation to the first bullet point above, to qualify for EIS relief, the individual investor must meet the following requirements:

  1. EIS—conditions for relief: individual investor conditions—Subscribe for shares on own behalf—nominees (although nominees are permitted—see below)

  2. subscribe for (EIS—conditions for relief: issued shares, the funds raised and the arrangements in general—Conditions relating to shares) shares wholly in cash that are fully paid up at the time of issue

  3. EIS—conditions for relief: individual investor conditions—Connection test with the issuing company

  4. EIS—conditions for relief:

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