What the clock shows
For each investment, a track from the day the shares were issued to the day the qualifying period ends, with today marked on it and the days left counted. Under it, the income tax relief a disposal before then would withdraw, and any gain deferred into the shares, which comes back into charge whenever they are sold.
The rules it applies
- SEIS gives income tax relief at 50% of the amount invested, and EIS at 30%, up to annual limits.
- EIS and SEIS shares must be held for at least three years from issue, or for EIS from when the company started trading if that is later. VCT shares must be held for five.
- Sell inside that period and the income tax relief is withdrawn in whole or in part.
- A gain deferred into EIS shares comes back into charge when the shares are disposed of, whenever that is.
- Gains on EIS and SEIS shares held for the period, with income tax relief claimed and not withdrawn, are free of Capital Gains Tax.
The year-by-year limits and rates are in the guide below. Relief also depends on the company continuing to qualify, which CoreFi cannot see.
Questions
What happens if I sell EIS shares within three years?
HMRC withdraws the income tax relief you claimed, in whole or in part, and the Capital Gains Tax exemption on a gain does not apply. Any deferred gain also comes back into charge.
Is the three years from the investment date?
From the date the shares were issued, or for EIS from the date the company started trading if that was later. CoreFi runs the clock from the dates you record for each investment.
Does it cover VCTs?
Yes, with a five-year period, because VCT relief has a five-year holding requirement.
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