Income Tax Act 2007 section 164

The no linked loans requirement

Section 164 prevents EIS income tax relief where a loan is made to the investor (or an associate) that is connected with the investor's subscription for shares in the qualifying company.

• During period A, no linked loan may be made by any person to the investor or an associate of the investor.
• A linked loan is one that would not have been made, or would not have been made on the same terms, if the investor had not subscribed (or proposed to subscribe) for the relevant shares.
• The concept of a loan extends to the giving of credit to, or the assignment of a debt due from, the investor or an associate.
• If a linked loan is identified, the investor's EIS income tax relief is denied, and the date from which interest becomes chargeable is determined by reference to the making of that loan.