Glossary · UK
What is Share Loss Relief?
A relief letting an investor set a loss on qualifying unlisted trading company shares (including EIS and SEIS shares) against Income Tax, instead of only against Capital Gains.
Full Definition
Share loss relief lets an individual who realises a loss on qualifying shares in an unlisted trading company -- including shares originally bought under the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) -- set that loss against their Income Tax for the year of the loss or the previous year, instead of being restricted to offsetting it only against Capital Gains. This can be significantly more valuable than ordinary capital loss relief for higher and additional-rate taxpayers, since Income Tax relief is given at the investor's marginal rate (up to 45%, or the Scottish equivalent), rather than the lower CGT rates. Where the shares also qualified for EIS or SEIS Income Tax relief on the original investment, the allowable loss for share loss relief purposes is reduced by the income tax relief already claimed, since that portion of the original cost was effectively already refunded by the government. The relief reflects the higher-risk nature of investing in small unlisted trading companies and is one of the key tax incentives, alongside the EIS/SEIS income tax and CGT reliefs themselves, that supports UK early-stage business investment.