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Posted Wed, 05 Jan 2022 13:45:14 GMT by ilnomis
Hi, I'm trying to find out whether I can benefit from EIS at all. I am: - unemployed - Have been earning rental income (below the £12k yearly allowance) From what I read having an EIS the investor can claim 30% income relief. This of course does not benefit me at all as my income does not exceed the £12k allowance anyway. 1a. Then the next part of the EIS is that if the investment is at least of three years old then any gains are tax free - Tax-free growth. Can I still benefit from this even though I can claim for the 30% income relief? 1b. If I claim for EIS Tax-free growth then how should I do this? 1c. Do I need to report the EIS in the tax year that I received the EIS certificate? 1d. If so, is this done via self assessment? Thank you
Posted Fri, 07 Jan 2022 10:31:45 GMT by Tom Elsbury
Whilst the income tax relief does not benefit you, given you're below the Personal Allowance threshold, you will want to claim some income tax relief on the EIS investment as you will otherwise not qualify for the subsequent CGT exemption on the disposal of the shares, assuming all other criteria are met. HMRC may be able to help further but I believe it is possible to opt to not receive a Personal Allowance, which would result in you receiving EIS income tax relief which subsequently means that you then receive CGT exemption on the later disposal. There was an interesting case discussing this exact point, see here for information - https://www.gov.uk/tax-and-chancery-tribunal-decisions/robert-ames-v-the-commissioners-for-hm-revenue-and-customs-2018-ukut-0190-tcc Relevant snippet from the case: 'In Ames v HMRC [2018] UKUT 190, the Upper Tribunal (UT) has held that capital gains tax (CGT) relief under the Enterprise Investment Scheme (EIS) is not available on the disposal of shares where no income tax relief was claimed on their acquisition.'
Posted Fri, 07 Jan 2022 16:52:55 GMT by HMRC Admin 19
Hi ilnomis,

The 30 % relief is relief on income tax. If you do not pay any income tax then there will be none to give relief on.

The gain is worked out separately from the relief.

You only need to report the EIS if you are claiming relief. You can see further guidance here:

Enterprise Investment Scheme – Income Tax relief (Self Assessment helpsheet HS341)

Capital Gains Tax and Enterprise Investment Scheme (Self Assessment helpsheet HS297)

Thank you.
Posted Mon, 17 Jan 2022 09:39:08 GMT by ilnomis
Thanks for the reply. 1: I have currently invested in some crowdfunding, i.e. invested in some companies where they are not publicly traded yet and have been issued shares. Provided that I hold them for at least 3 years then do I qualify for the investor's relief? 2: If after 3 years those shares become listed (i.e. they are successful enough to be listed on the stock exchange) then does that still qualify for the investor's relief? 3: Is this investor's relief applied via self assessment (I currently do self assessments)? Thank you
Posted Mon, 17 Jan 2022 15:31:54 GMT by HMRC Admin 18
Hi,

Guidance on investors relief can be found here:

Investors' Relief (HS308)

Thank you.

 

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