Income Tax Act 2007 section 209

Disposal of shares

Section 209 deals with the withdrawal or reduction of EIS income tax relief when an investor disposes of shares before the end of period A (broadly, the three-year period beginning with the date the shares were issued).

• If an investor disposes of EIS shares before the end of period A and the disposal is not at arm's length, the EIS relief attributable to those shares is fully withdrawn.
• If the disposal is at arm's length, EIS relief is reduced by the consideration received multiplied by the EIS original rate, or fully withdrawn if the relief attributable is less than or equal to that amount.
• Disposals between spouses or civil partners who are living together at the time of the disposal are exempt from this section — the relief is not affected.
• Disposals that occur as a result of the investor's death are also exempt and do not trigger any withdrawal or reduction of EIS relief.