Income Tax Act 2007 section 218

Value received where there is more than one issue of shares

Section 218 deals with how to apportion value received by an investor across multiple share issues that qualify for EIS relief, so that the same value is not counted more than once when reducing or withdrawing that relief.

• Where an investor holds EIS-qualifying shares from two or more separate issues by the same company and receives value during the overlapping applicable periods, the value must be split between those issues.
• The value attributed to each issue is calculated by multiplying the total value received ("R") by the fraction A divided by B, where A is the amount on which the investor obtained EIS relief for that particular issue and B is the total EIS relief amount across all the relevant issues.
• This apportionment prevents the same value received from being used to reduce or withdraw EIS relief more than once — without it, the full value could be applied against each issue separately, producing an unfair multiple reduction.
• The formula also accommodates situations where an investor has claimed EIS relief on only some of the shares in an issue for which they were eligible, because it uses the amount on which relief was actually obtained rather than the full subscription amount.