E3.101 Overview of EIS

Part E3     Reliefs for investors

E3.1     Enterprise investment scheme

E3.2     Venture capital trusts

E3.3     Individual savings accounts

E3.4     Personal equity plans

E3.5     Child trust funds

E3.6     Community investment tax relief

E3.7     Share loss relief

E3.8     Seed Enterprise Investment Scheme (SEIS)

E3.9     Tax relief for social investments

Division E3.1     Enterprise investment scheme

Overview of EIS income tax relief

E3.101 Overview of EIS

The Enterprise Investment Scheme (EIS) is designed to encourage investment in small, young companies that need investment to grow but have limited access to market finance often because they are perceived as high risk. EIS offers income tax reliefs and capital gains tax (CGT) reliefs to individual investors who subscribe to new shares in such companies. There are four reliefs available to the investor under EIS and this division discusses all of them in detail.

EIS reliefsBrief descriptionMain commentary
EIS income tax reliefFor qualifying investments, relief is given as a tax reduction against the overall liability for the tax year of the investment (or the preceding year)1.
A brief overview of EIS income tax relief is given below.
CGT exemptionWhere a claim to EIS income tax relief has been made and not subsequently withdrawn, any gain arising on the subsequent disposal of the EIS shares will not be charged to CGT2.E3.185–E3.191
Loss reliefWhere a qualifying investment is made, and the income tax relief is successfully claimed and not withdrawn, any losses (after

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