VCM20120 | EIS: disposal relief: part-disposal: example

July 2018 an investor subscribes £100,000 for 100,000 shares in an EIS company. Income Tax relief of £30,000 is given in 2018-19 as the EIS rate is 30%.

January 2020 the investor sells 25,000 shares for £10,000. Income Tax relief of £3,000 is withdrawn, (£10,000 x 30%, the EIS original rate). Income Tax relief of £4,500 attributable to the shares sold is not withdrawn. The allowable loss is calculated as below.

Disposal proceeds £10,000

less cost £25,000

Reduced by Inocme Tax Relief £4,500 £20,500

Allowable £(10,500)

*This is the EIS Income Tax relief not withdrawn which remains attributable to the 25,000 shares sold.