½Û×ÓÊÓƵ

EIS income tax relief can be withdrawn or reduced for a number of reasons. One of these reasons is a premature disposal of the shares. Where an investor makes a disposal of relevant shares before the end of period A (see E3.104) the disposal is premature, and any EIS relief attributable to the disposed shares (see E3.160) is withdrawn or reduced¹.

The entire EIS relief attributable to the shares must be withdrawn if the sale was not at arm's length².

Where the disposal is at arm's length the EIS relief attributable to the shares must be reduced by the lower of³:

1. Ìý

   •ÌýÌýÌýÌý the whole of the relief attributable to the shares (ie complete withdrawal)

2. Ìý

   •ÌýÌýÌýÌý the EIS rate multiplied by the value of the consideration received by the investor for the disposal

The EIS rate is currently 30%. It was 20% for shares issued before 6th April 2011⁴. The rate applied is the one that was in force for the tax year for