Income Tax Act 2007 section 201

Attribution of EIS relief to shares

Section 201 explains how EIS income tax relief is traced back and attributed to specific share issues and individual shares, which is essential for determining what happens when relief is later withdrawn or reduced.

• Where an investor claims EIS relief on a single share issue in a tax year, the full tax reduction is attributed to that issue; where multiple issues are involved, the reduction is apportioned between them in line with the amounts claimed for each issue
• Once relief is attributed to an issue, it is further divided proportionally among each individual share in respect of which the claim was made
• If bonus shares of the same class and rights are issued in the same company, the relief previously attributed to the original shares is spread across the combined holding of original and bonus shares, and the bonus shares are then treated as part of the original issue
• If EIS relief is later withdrawn, relief on each affected share drops to nil; if it is reduced, each affected share's relief is reduced by a proportionate part of the total reduction

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