EIS tax relief to be claimed in a specific order?

Does EIS relief have to be claimed in the date order of investing or issue of EIS3 certificate?

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Where multiple EIS investments are being made on different dates, in different companies, does the EIS tax relief have to be claimed:
A. in the date order in which the investments are made?
B. in the date order in which the EIS3 certificates are issued?
C. in any order in which the investor chooses?

The order may impact the extent to which disposal relief is available on the investments.

Example:
For 2016-17 Mr X has an estimated taxable income of £16,000. So tax payable = 20% of £16000 less £11000 = £1000

Mr X is planning to make EIS investments in 3 different companies of £1000, £2000 and £5000.

Q1. If the date order in which the investments are made is £1000 first, followed by £2000 say a week later and finally £5000 a month later, can he claim that the EIS relief be provided fully on the first two (30% relief on £3000 =£900) and "partially" on the third one (and pay Nil tax)?

(A 'partial' tax relief on the £5K investment would still mean that any future growth is fully tax free as full Disposal relief would be still available on this one - Note 1 below)

Q2. Would it make a difference if the £5K investment is made first followed by the £1K say a week later and finally the £2K say a month later?
In this scenario, in his tax return can he claim that the full EIS tax relief be provided on the £1K and the £2K investments first (30% relief on 3000 =£900) and "partially" on the third one, thereby pay Nil tax and obtain full future disposal relief on on all three investments?

If he is forced to claim tax relief on the £5K first, presumably disposal relief would only be available on the £5K investment as the 30% tax relief on this will have exhausted his tax liability to Nil and thereby no disposal relief will be available on the other two investments?

Q3. Is the date order in which the EIS3 certificates are issued relevant to the order in which EIS tax relief is claimed?

Note 1: HMRC Helpsheet 297 states in the section "What is Disposal Relief" :"You may not have to pay Capital Gains Tax on a gain on your disposal of the EIS shares, even if you did not receive Income Tax relief in full on all your EIS shares, provided you received some Income Tax relief."

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Portia profile image
By Portia Nina Levin
12th Dec 2016 10:44

Clue below (taken from HS341):

How to claim the relief
Enter in box 2 in the ‘Other tax reliefs’ section on page Ai 2 of the
Additional information pages, the total amount of the subscriptions on
which you are now claiming relief (but not more than the maximum figure
of £1 million). Include any amount for which you received relief by way of
an increase in your PAYE code or a reduction of a payment on account.
But exclude any amount for which you are claiming relief for the previous
year and not the current year.
Then enter details of each investment in the ‘Any other information’ box,
box 19, on page TR 7 of the tax return.
The details required for each investment are:
• the name of the company invested in
• the amount on which you are claiming relief for this year
• the date of issue of the shares
• the name of the HM Revenue & Customs office authorising
the issue of the certificate, and their reference (as shown on the certificate)
• if you have subscribed more than £1 million for shares on which relief
could be claimed, how you want the relief attributed to them.
Read ‘How much relief can you get for your subscriptions for shares’
on page 3 of this helpsheet.

Thanks (1)
Replying to Portia Nina Levin:
avatar
By Sunshine111
12th Dec 2016 12:45

Thanks.

If I am interpreting HS341 correctly, Mr X can "pick and choose" the investment and amount of EIS tax relief claimed on each, irrespective of the date of the investment / issue of the EIS3 certificate. Trust this is correct?

Cheers.

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