A step-by-step guide to claiming your tax relief

A step-by-step guide to claiming your tax relief

EIS investors can claim back up to 30% income tax relief, but how do you put your claim in practice?

What you will need to claim your tax relief:

When completing your tax form, this is when you would normally claim EIS tax relief. You will be asked some information which is included in your EIS3 certificate.

The certificate you receive from each of the companies you invested in, typically a few months after the investment. If you invested in a fund, you will typically receive one EIS3 for each of the underlying companies.

The EIS3 certificate contain the same information, which you will need:

  • The name of the company in which you have invested 
  • The amount you have subscribed and on which you can claim tax relief
  • The date the shares were issued (this is usually different from the date you invested)
  • The name of the relevant HMRC office and its reference

EXAMPLE OF EIS3 CERTIFICATE

You have two options for how you can submit your tax return- by post or online. The general rule is that the relief is available for the tax year in which the shares are issued. But if you choose, you can treat some or all of the shares as issued in the previous year and claim relief in that previous year, subject to the maximum limit for the year. You’ll find the date of issue of your shares recorded on form EIS3.

If you want to make use of this option:

  • enter on your tax return the amount which you want to claim for in tax year 2019 to 2020, including any amounts invested in tax year 2020 to 2021 for which you already hold a valid EIS3 and which you want to have relieved in tax year 2019 to 2020 – remember, the maximum you can claim in total for tax year 2019 to 2020 is £2 million but no more than £1 million can be claimed for shares that are not in KIC
  • if you want to treat some or all of the shares subscribed for in tax year 2019 to 2020 as though subscribed for in tax year 2018 to 2019, complete the claim form in form EIS3 to show the amount on which you are claiming relief for the previous year and send it to us

Please note that you will only be able to claim relief in the year before the year in which the fund closed, if the shares were issued in the same year as the year in which the fund closed.

How to claim EIS tax relief on your paper tax return

  • You will need to complete the “Additional information” sheet (form SA101) and enclose it with your return. 
  • In box 2 (“Subscriptions for shares under the Enterprise Investment Scheme”) of the “Other tax reliefs” section, on page Ai 2, please write the total amount of all your EIS subscriptions on which you wish to claim tax relief.
Other tax relief form

Please note, HMRC doesn’t require you to submit the EIS3 certificate for the investments on which you are claiming tax relief. It might, however, ask you to produce them, so please ensure you keep them safe.

Tax relief claimed via your tax return will reduce the amount of tax you will have to pay. If you have already paid too much income tax, the excess can either be repaid by cheque or directly into your bank account.

How to claim EIS tax relief in your online self-assessment form

You will need to answer “Yes” to the question on other tax reliefs in section 3, “Tailor your return”: 

Tax relief form

In section “Other tax relief and deductions (Page 2)” of section 4, “Fill in your return”, you will have to type in the total amount of all your EIS subscriptions on which you wish to claim tax relief and can provide details of each of your EIS investments. 

Tax form

Please note, HMRC doesn’t always require you to send the EIS3 certificate for the investments on which you are claiming tax relief.  However, you will need to have received them to submit your tax return. HMRC might ask you to produce the certificates, so please ensure you keep them safe.

Tax relief claimed via your tax return will reduce the amount of tax you will have to pay. If you have already paid too much income tax, the excess can either be repaid by cheque or directly into your bank account.

Alternative way to claim EIS tax relief

There is also an alternative way to claiming EIS tax relief. You could complete the claim form you receive – it’s on pages 3 and 4 of the EIS3 certificate – and send it to your HMRC tax office.

EXAMPLE OF EIS CLAIM FORM

There are some circumstances when you should use this method. These include:

  • if you want to claim the tax relief against a previous year. This could be the case if you wish to use “carry back” or if you didn’t receive your EIS3 certificate in time for the tax return deadline. 
  • if you pay tax via PAYE and want to receive the tax relief through an adjustment of your tax code – this might be an option if you have invested in EIS and received your EIS3 certificate early in the tax year. You will also have to enter details of the claim when you file your tax return. 
  • if you want to claim deferral relief as well as income tax relief.

In addition, you could use this method if you don’t habitually file a tax return, for instance, if all of your tax is paid at source through PAYE.

The information contained on this website should not be taken as financial advice or as a personal recommendation by Films4U. Before investing you should always seek appropriate legal and financial advice from an authorised person specialising in investments of this kind.

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