Income Tax Act 2007 section 245

Transfers between spouses or civil partners

Section 245 provides for "step into shoes" treatment when EIS shares are transferred between spouses or civil partners during their lifetime, so that the receiving spouse or civil partner is treated as the original subscriber for the purposes of any future EIS relief withdrawal or reduction.

• When shares carrying EIS relief are transferred between spouses or civil partners during their lifetime, the receiving spouse or civil partner (B) is treated as if they had originally subscribed for the shares at the same cost as the transferring spouse (A).
• B is treated as having received the same income tax reduction, in the same tax year, and for the same amount as A originally received, and the EIS relief remains attributable to the shares despite the transfer.
• If the EIS relief attributable to the shares had already been reduced before A obtained the relief, B inherits that same reduced position, and the rules dealing with cases where maximum EIS relief was not obtained apply to B as they would have applied to A.
• If any subsequent disposal or event triggers a reduction or withdrawal of EIS relief, the resulting tax assessment is made on B, not on A.