Bespoke Tax Accountants

Specialist tax advice, accountancy and tax returns

01242 505970
info@bespoketax.com

  • Home
  • About Us
    • Meet The Team
    • Careers
    • Statutory Information
    • Privacy Policy
  • Who We Help
    • Personal and Family
    • Business
    • Our Clients
  • News
    • Making Tax Digital
  • Giving Back
  • Contact
  • Cloud Accounting
    • Xero

EIS Income Tax relief restriction for connected parties

13th February 2019 By bespoketax

EIS Income Tax relief restriction for connected parties

The Enterprise Investment Scheme (EIS) is designed to help smaller higher-risk trading companies raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.

In order for investors to be able to claim EIS tax reliefs, the company which issues the shares has to meet a number of rules regarding the kind of company it is, the amount of money it can raise, how and when that money must be employed for the purposes of the trade, and the trading activities carried on.

The amount of Income Tax relief for individual investors in the EIS is 30%, and the maximum annual amount that an individual can invest through the EIS is £1 million. The generous tax allowances are designed to off-set the fact that making investments in these types of companies can carry a high-risk. 

There is an Income Tax relief restriction that effectively denies EIS relief for connected parties. This measure is in place partly to ensure that the scheme attracts outside investors. The legislation defines associates as including business partners, trustees of any settlement of which the investor is a settlor or beneficiary, and relatives. Relatives are defined as spouses and civil partners, parents and grandparents, children and grandchildren. This means, for example, that parents could not invest in their children’s businesses. 

However, the list of associates does not include ‘family’ members such as brothers and sisters, aunts and uncles, nephews and nieces, unmarried partners and in-laws. This leaves some scope to attract investment from one’s extended family.

Filed Under: Uncategorised

Recent News

  • Website development costs
  • Lockdown changes 12 April 2021
  • Repaying overclaimed SEISS grants
  • Property repossessions from 1 April 2021

News Categories

  • Budget Summary
  • Business
  • Capital allowances
  • Capital Gains Tax
  • Construction Industry Scheme
  • Corporate Governance & Regulation
  • Corporation Tax
  • Duties
  • Employee Benefits
  • Employment & Payroll
  • Employment Law
  • Family Tax Credits
  • General
  • HMRC notices
  • Income Tax
  • Inheritance Tax
  • National Insurance
  • NIC & Pensions
  • Overseas personal tax issues
  • Overseas tax issues
  • Payroll
  • Pension
  • Personal
  • Practice News
  • Stamp Duty Land Tax
  • Tax credits
  • Tax Diary
  • Value Added Tax

About Us

Bespoke has a reputation for helping our clients make the most of their financial situations and in turn we have become a trusted extension of their business or family.

Bespoke assist with compliance requirements, providing specialist tax advice, and planning for now and the future.

Keep informed.
Sign up for our Topical Newsletter

Our FREE monthly newsletter will keep you up to date with the latest news related to the world of accountancy.

Register Here

Contact

Delta Place,
27 Bath Road, Cheltenham,
Gloucestershire, GL53 7TH
01242 505970
info@bespoketax.com

ICAEW Chartered AccountantsXERO Gold PartnerChartered Institute of TaxationMember of EISA

Copyright © 2021 · Bespoke Tax Accountants · Website by Culpepper & Co

.
This site uses cookies: Find out more.