Income Tax Act 2007 section 229

Maximum relief not obtained for share issue

Section 229 adjusts the amount of EIS relief that must be withdrawn when share capital is repaid to other persons, in cases where the investor did not obtain the full rate of EIS income tax relief on the original share subscription.

• Where the actual income tax reduction obtained on EIS shares is less than the tax at the EIS original rate on the amount claimed, the withdrawal amount is scaled down proportionately
• The withdrawal amount "R" under section 224(2) is reduced by multiplying it by the fraction A divided by B, where A is the actual tax reduction and B is the tax at the full EIS rate
• If EIS relief attributable to the shares was reduced before being obtained (other than for bonus share issues), the amount A is treated as if that earlier reduction had not occurred
• Reductions arising from the attribution of EIS relief where bonus shares have been issued are excluded from this adjustment