SolvedVCM20110 | EIS: disposal relief: losses: example
From HM Revenue & Customs · Venture Capital Schemes Manual
June 2018 an investor subscribes £100,000 for 50,000 shares in an EIS company. Income Tax relief of £30,000 is given in 2018-19, as the EIS rate is 30%.
January 2021 the investor sells all 50,000 shares for £60,000. Income Tax relief of £18,000 on the £60,000 is withdrawn (£60,000 x 30%, the EIS original rate). Income Tax relief of £12,000 is not withdrawn and remains attributable to the shares sold. The allowable loss is calculated as below.
| Description | Amount | Total |
|---|---|---|
| Disposal proceeds | - | £ 60,000 |
| Less cost | £100,000 | - |
| Reduced by Income Tax relief* | £ 12,000 | £ 88,000 |
| Allowable loss | - | £(28,000) |
*This is the EIS Income Tax relief not withdrawn which remains attributable to the shares sold.