VCM20080 - EIS: disposal relief: TCGA92/S150B(2): example
In this example TCGA92/S150A(2) applies but TCGA92/S150A(3) does not.
- July 2015 investor subscribes £1,000,000 for 100,000 shares in an EIS company. Maximum Income Tax relief of £300,000 is given in the tax year 2015-16.
- August 2017 the investor receives value from the company and as a consequence the Income Tax relief is reduced by £60,000 by making an assessment.
- January 2020 all the shares are sold for £1,150,000.
The chargeable gain is calculated as below.
Disposal proceeds £1,150,000
less cost £1,000,000
Chargeable gain £150,000
The exemption is reduced by the following amount:
Chargeable gain X Reduction in relief
Relief attributable to shares before the reduction
£150,000 X £60,000 = £30,000
£300,000
£120,000 of the gain is exempt and £30,000 is chargeable.