If you have invested in a company eligible for Enterprise Investment Scheme (EIS) relief – what now? How do you claim EIS income tax relief after investing? With 2017-18 self-assessment returns due shortly, many are looking to understand how to claim their EIS tax relief. We’ll tell you how!
What you need
In order to complete your self-assessment return to claim your EIS income tax relief, you will need two key documents:
The Share Certificate is issued after the company’s share issue date. This document will include details such as the company name, the amount invested, date your shares were issued, and the number of shares you have been allocated. This is a valuable document and should be kept somewhere safe and readily available if requested i.e. on an exit of the business.
EIS 3 Certificate
EIS 3 Certificates are required to complete your self-assessment return. These certificates are issued by HMRC directly to the company (or an agent managing the process on their behalf). These are issued after the company has been trading for 4 months. As a result, naturally these will usually follow some time after your share certificate.
The EIS 3 Certificate will give you similar details to your share certificate, including company name and amount invested, but it will also show details of the HM Revenue & Customs office that issued the certificate. These specific details are required to complete your self-assessment and claim your income tax relief. This certificate also includes the date when the three year qualifying period for the shareholding ends, which also tells you the minimum length of time you are required to hold your investment to retain the EIS tax relief.
Both of these documents are issued in hard copy so do ensure your correct address is on file with the Company or the agent handling your EIS investment.
Completing the Tax Return
Information from your Share Certificate and EIS 3 Certificate needs to be entered onto your self-assessment form in box 2 of the ‘Other Tax Reliefs’ section on page Ai2. Here you enter the total amount of the subscriptions on which you are now claiming EIS tax relief.
In box 21 of the ‘Any other information’ section on page Ai4, you should enter additional details for each investment including the name of the company, date of share issue and details of the issuing HM Revenue & Customs office.
NB – HMRC may request to see a copy of your EIS 3 Certificate so it is best to keep it safe.
If you do not have your share certificate or EIS 3 Certificate when you go to complete your self-assessment return, first remember the EIS 3 Certificate is only issued once the investee company has been trading for 4 months. If the Company you have invested in has traded for 4 months and you have still not received your EIS 3 certificate, contact the Agent or Company through whom you invested, and they should be able to help you locate your EIS 3 Certificate, or explain why it has not yet been issued.
Guide to claim EIS Income Tax Relief
If you would like more information on the EIS and how to claim your reliefs, including carry-back, our Guide to Claiming Income Tax Relief on EIS Investments may be of use. This short guide gives a brief introduction of the EIS reliefs available, followed by instructions on how to claim your EIS income tax relief on your 2015-16 self-assessment return, or how to carry-back EIS tax relief to 2014-15 and amending your self-assessment for this tax year.