27. EIS

Question 1

what are conditions for company to be qualifying EIS

Answer 1

unlisted
trading
not excluded trade
assets less than 15 m before share issue (16 after)
permanent establishment in UK

Question 2

what are requirements for EIS relief - what does taxpayer have to show

Answer 2

risk to capital
investing for long term growth of company

Question 3

what is income tax consequence of subbing for EIS shares

Answer 3

30% tax reducer on the amount subbed up to 1 million (2 mil if Knowledge intensive company)

Question 4

how many years can you carry back EIS sub

Answer 4

only one year

Question 5

what are requirements for EIS

Answer 5

can’t be connected to company - can’t be employee

Question 6

what happens when selling EIS shares

Answer 6

if less than three years then the income tax reduced is withdrawn

withdrawal amount is lower of original income tax reducer or 30% of sales proceeds received

Question 7

what is income tax consequences for SEIS shares

Answer 7

income tax reducer of 50% of amount subbed up to £200,000 @ 50%

Question 8

what happens when selling SEIS shares

Answer 8

if less than 3 years then income tax reducer withdrawn -> lower of original and 50% of sales proceeds