Income Tax Act 2007 section 158

Form and amount of EIS relief

Section 158 sets out how Enterprise Investment Scheme (EIS) income tax relief is calculated, including the rate of relief, the annual investment limits, and the enhanced limits available for investments in knowledge-intensive companies.

• An eligible individual who claims EIS relief receives a tax reduction equal to 30% of the amount subscribed for qualifying shares in the tax year they were issued, subject to an annual cap.
• The standard annual investment limit is £1 million, but this increases by the amount subscribed for shares in knowledge-intensive companies (KIC shares), up to a maximum overall limit of £2 million.
• An individual may elect to treat shares issued in the current tax year as if they had been issued in the preceding tax year, with tax liabilities for both years adjusted accordingly.
• Where the issuing company has been trading for less than three years, a modified forward-looking test applies to determine whether it qualifies as a knowledge-intensive company, based on projected research and development spending over the three years following the share issue.