Chapter 28 - EIS Flashcards
How do you calculate the EIS tax reducer?
30% the lower of -
amount subscribed
or
maximum investment eligible for relief
What is the max investment eligible for relief for EIS & KIC?
EIS - £1 million
KIC - £2 million (no more than £1m in non-KIC)
True or false
You cannot carry back the EIS subscription to the previous year
False
Unless the limit has been exceed
What are the conditions that need to be met for subscribing to EIS?
a. Must not be connected with the company (not employee or hold more than 30% of shares)
b. Must own the shares for at least 3 years
c. Must not hold any existing shares in the company
What is the clawback the lower of?
a. Original income tax reducer
b. 30% x sale proceeds received (if sold for a loss)
True or false
There is no withdraw of income tax reducer if sold after three years
True
Can you claim for a loss to be set against income of current year or proceeding year?
Yes
What are the qualities for a qualifying EIS company?
a. They are an unquoted trading company in the UK
b. They do not trade in financial services, farming, gardening etc
c. Assets must not exceed £1mil
d. Company must employ fewer than 250 employees
e. Cannot have raised more than £5m through EIS / SIES / VCT in previous 12 months
In order for an investment to qualify for EIS income tax relief, it must be reasonable to conclude what?
a. The objectives of the company are to grow & develop
b. There is a significant risk of a loss of capital greater than the return on investment
How do you calculate the income tax reducer for SEIS?
50% x amount subscribed
Max £200k
What are the conditions for subscribing to SEIS?
a. Must not be connected (have more than 30% of shares in the company)
b. Can be a director (no more than 30%)
c. Must own shares for at least 3 years
When selling SEIS shares, what is the clawback the lower of?
Original income tax reducer
or
50% x sale proceeds received (if sold for a loss)
Provide some examples of a qualifying SEIS company:
a. Company assets must not exceed £350,000 before the share issue
b. Company must employer fewer than 25 employees
c. Cash raised by the issue of SEIS shares must be used for the trade within 3 years
