Taxation of Chargeable Gains Act 1992 section 150A

Enterprise investment schemes

Section 150A sets out the capital gains tax rules that apply when an individual disposes of shares to which Enterprise Investment Scheme (EIS) income tax relief is attributable, covering the exemption of gains, the calculation of allowable losses, share identification rules, and the treatment of share reorganisations.

• Gains on disposal of EIS shares are exempt from CGT provided the shares are held beyond the required minimum period and full EIS income tax relief was obtained; where only partial income tax relief was given, only a proportionate part of the gain is exempt
• Losses on disposal of EIS shares are allowable, but the cost of the shares must be reduced by any EIS income tax relief still attributable to them, thereby reducing the allowable loss
• Normal share pooling and identification rules are disapplied for EIS shares; instead, special EIS identification rules apply, matching disposals to the earliest acquisitions first
• Share reorganisation rules for bonus issues apply separately to each category of holding (EIS relief shares, SEIS relief shares, and non-relief shares), and the rules for share exchanges and company reconstructions are disapplied for EIS shares except in specific qualifying circumstances