What is the EIS income tax relief rate in the UK?

Full answer

The Enterprise Investment Scheme (EIS) is a government-backed scheme to encourage investment in smaller, higher-risk UK trading companies. Income tax relief: - Rate: 30% of the amount invested. - Maximum investment qualifying for income tax relief: £1,000,000 per tax year. - For Knowledge Intensive Companies (KICs): £2,000,000 per tax year. - Example: invest £50,000 in qualifying EIS shares and claim £15,000 off your income tax bill. - Relief is carried against the tax year of investment or can be carried back to the previous year. Conditions for income tax relief: - The company must be a qualifying EIS company (broadly: unquoted UK trading company, gross assets under £15m before investment, fewer than 250 full-time employees). - You must not be connected to the company (not an employee, director -- though you can become a director after investment, or have more than 30% of shares). - Shares must be held for at least 3 years from the later of the date of issue or the date the company started trading. CGT exemption: - Gains on EIS shares held for 3 years are exempt from CGT. CGT deferral relief: - Capital gains from disposing of any asset can be deferred by reinvesting the gain into EIS shares within 1 year before or 3 years after the gain arises. The deferred gain crystallises when the EIS shares are disposed of. Loss relief: - If EIS shares fail, the loss (net of income tax relief already claimed) can be set against income tax in the year of disposal or the previous year. SEIS comparison: - Seed EIS (SEIS) offers 50% income tax relief on investments up to £200,000 in very early-stage companies -- more generous but with stricter company conditions.

Related guides

• Eis Guide
• Seis Guide

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