|
| |
|
(4) | But a deduction for that purpose is to be made only from the person’s |
| |
| |
(5) | A person’s miscellaneous income is so much of the person’s total income as |
| |
| |
(a) | income or gains arising from transactions, and |
| 5 |
| |
| This is subject to subsection (6). |
| |
(6) | If the loss was made by the person as a partner in a partnership, the |
| |
transactions covered by subsection (5)(a) are limited to transactions entered |
| |
| 10 |
(7) | In calculating a person’s net income for a tax year, deductions under this |
| |
section from the person’s miscellaneous income are to be made before |
| |
deductions of any other reliefs from that miscellaneous income. |
| |
(8) | In this section “section 1016 income” means income on which income tax is |
| |
charged under or by virtue of any provision to which section 1016 applies. |
| 15 |
(9) | This section needs to be read with— |
| |
(a) | section 153 (how relief works), |
| |
(b) | section 154 (transactions in deposit rights), and |
| |
(c) | section 155 (claims). |
| |
| 20 |
This section explains how the deductions are to be made. |
| |
The amount of the loss to be deducted at any step is limited in accordance with |
| |
| |
| |
Deduct the loss from the miscellaneous income for the loss-making year. |
| 25 |
| |
Deduct from the miscellaneous income for the next tax year the amount of the |
| |
loss not previously deducted. |
| |
| |
Continue to apply Step 2 in relation to miscellaneous income for subsequent |
| 30 |
tax years until all the loss is deducted. |
| |
| |
154 | Transactions in deposit rights |
| |
(1) | This section applies if— |
| |
(a) | a person makes a loss from the disposal or exercise of a right to receive |
| 35 |
| |
(b) | the disposal or exercise is a transaction in a deposit under Chapter 11 |
| |
of Part 4 of ITTOIA 2005 (see subsection (2)), and |
| |
(c) | the person’s total income for a tax year includes interest payable on the |
| |
| 40 |
|
| |
|
| |
|
(2) | The disposal or exercise is a transaction in a deposit under Chapter 11 of Part |
| |
4 of ITTOIA 2005 if, assuming there were a profit or gain from it, the profit or |
| |
gain would be charged to tax under that Chapter. |
| |
(3) | For the purposes of the giving of loss relief against miscellaneous income for |
| |
the loss mentioned in subsection (1)(a), the interest mentioned in subsection |
| 5 |
(1)(c) is treated as miscellaneous income for the tax year. |
| |
| |
155 | Time limit for claiming relief |
| |
(1) | So far as a claim for loss relief against miscellaneous income concerns the |
| |
amount of the loss for a tax year, it must be made on or before the fifth |
| 10 |
anniversary of the normal self-assessment filing date for the tax year. |
| |
| |
(a) | the question whether, and |
| |
| |
| loss relief against miscellaneous income should be given for a tax year may be |
| 15 |
the subject of a separate claim made on or before the fifth anniversary of the |
| |
normal self-assessment filing date for the tax year. |
| |
| |
Enterprise investment scheme |
| |
| 20 |
| |
| |
156 | Meaning of “EIS relief” and commencement |
| |
(1) | This Part provides for EIS income tax relief (“EIS relief”), that is, entitlement to |
| |
tax reductions in respect of amounts subscribed by individuals for shares. |
| 25 |
(2) | In this Part “EIS” stands for the enterprise investment scheme. |
| |
(3) | In accordance with section 1034(3), this Part has effect only in relation to shares |
| |
issued on or after 6 April 2007. |
| |
| This is subject to Schedule 2 (transitional provisions and savings). |
| |
157 | Eligibility for EIS relief |
| 30 |
(1) | An individual (“the investor”) is eligible for EIS relief in respect of an amount |
| |
subscribed by the investor on the investor’s own behalf for an issue of shares |
| |
in a company (“the issuing company”) if— |
| |
(a) | the shares (“the relevant shares”) are issued to the investor, |
| |
(b) | the investor is a qualifying investor in relation to the relevant shares |
| 35 |
| |
|
| |
|
| |
|
(c) | the general requirements (including requirements as to the purpose of |
| |
the issue of shares and the use of money raised) are met in respect of the |
| |
relevant shares (see Chapter 3), and |
| |
(d) | the issuing company is a qualifying company in relation to the relevant |
| |
| 5 |
(2) | To be eligible for EIS relief in respect of an amount subscribed for shares issued |
| |
by the issuing company in a tax year, the investor must have subscribed at least |
| |
£500 for shares in the issuing company which— |
| |
(a) | meet the requirements of section 173(2) (ordinary shares which carry no |
| |
preferential rights or rights of redemption), and |
| 10 |
(b) | are issued in the tax year. |
| |
(3) | Subsection (2) is subject to section 251(3) (approved investment funds). |
| |
158 | Form and amount of EIS relief |
| |
| |
(a) | is eligible for EIS relief in respect of any amount subscribed for shares, |
| 15 |
| |
(b) | makes a claim in respect of all or some of the shares included in the |
| |
| |
| the individual is entitled to a tax reduction for the tax year in which the shares |
| |
were issued (“the current year”). |
| 20 |
| This is subject to the provisions of this Part. |
| |
(2) | The amount of the tax reduction to which the individual is entitled is the |
| |
amount equal to tax at the savings rate for the current year on— |
| |
(a) | the amount or, as the case may be, the sum of the amounts subscribed |
| |
for shares issued in that year in respect of which the individual is |
| 25 |
eligible for and claims EIS relief, or |
| |
| |
(3) | The tax reduction is given effect at Step 6 of the calculation in section 23. |
| |
(4) | Subject to subsection (5), if in the case of any issue of shares— |
| |
(a) | which are issued before 6 October in the current year, and |
| 30 |
(b) | in respect of the amount subscribed for which the individual is eligible |
| |
| |
| the individual so claims, subsections (1) and (2) apply as if, in respect of such |
| |
part of that issue as may be specified in the claim, the shares had been issued |
| |
in the preceding tax year; and the individual’s liability to tax for both tax years |
| 35 |
is determined accordingly. |
| |
| |
(a) | no more than half the shares included in an issue may be treated under |
| |
subsection (4) as issued in the preceding tax year, and |
| |
(b) | the total amount subscribed for any shares (included in any issues) |
| 40 |
treated under subsection (4) as issued in that year is not to exceed |
| |
| |
|
| |
|
| |
|
| |
| |
(1) | This section applies for the purposes of this Part in relation to any shares issued |
| |
| |
(2) | “Period A” means the period— |
| 5 |
| |
(i) | with the incorporation of the company, or |
| |
(ii) | if the company was incorporated more than two years before |
| |
the date on which the shares were issued, two years before that |
| |
| 10 |
(b) | ending immediately before the termination date relating to the shares |
| |
| |
(3) | “Period B” means the period— |
| |
(a) | beginning with the issue of the shares, and |
| |
(b) | ending immediately before the termination date relating to the shares. |
| 15 |
(4) | “Period C” means the period— |
| |
(a) | beginning 12 months before the issue of the shares, and |
| |
(b) | ending immediately before the termination date relating to the shares. |
| |
160 | Overview of other Chapters of Part |
| |
| 20 |
(a) | Chapter 5 provides for the attribution of EIS relief to shares and the |
| |
making of claims for such relief, |
| |
(b) | Chapter 6 provides for EIS relief to be withdrawn or reduced in the |
| |
circumstances mentioned in that Chapter, |
| |
(c) | Chapter 7 makes provision with respect to the procedure for the |
| 25 |
withdrawal or reduction of EIS relief, and |
| |
(d) | Chapter 8 contains supplementary and general provisions. |
| |
161 | Other tax reliefs relating to EIS |
| |
(1) | Chapter 6 of Part 4 (losses on disposal of shares) provides for relief against the |
| |
income of an individual who incurs an allowable loss for capital gains tax |
| 30 |
purposes on a disposal of shares to which EIS relief is attributable. |
| |
(2) | Subsection (3) of section 392 (loan to buy interest in close company) provides |
| |
that subsection (2)(a) of that section does not apply if at any time— |
| |
(a) | the individual by whom the shares are acquired, or |
| |
(b) | that individual’s spouse or civil partner, |
| 35 |
| makes a claim for EIS relief in respect of the shares. |
| |
(3) | Section 150A of TCGA 1992 makes provision about gains or losses on the |
| |
disposal of shares to which EIS relief is attributable. |
| |
(4) | Schedule 5B to TCGA 1992 provides relief in respect of the re-investment under |
| |
EIS of the proceeds of assets disposed of in circumstances where there would |
| 40 |
otherwise be a chargeable gain. |
| |
|
| |
|
| |
|
(5) | Schedule 5BA to TCGA 1992 provides for the application of taper relief in cases |
| |
where EIS relief or relief under Schedule 5B to that Act applies. |
| |
| |
| |
| 5 |
| |
The investor is a qualifying investor in relation to the relevant shares if the |
| |
requirements of this Chapter are met as to— |
| |
(a) | no connection with the issuing company (see section 163), |
| |
(b) | no linked loans (see section 164), and |
| 10 |
(c) | no tax avoidance (see section 165). |
| |
| |
163 | The no connection with the issuing company requirement |
| |
(1) | The investor must not be connected with the issuing company (whether before |
| |
or after its incorporation) at any time during the period— |
| 15 |
(a) | beginning two years before the issue of the shares, and |
| |
(b) | ending immediately before the termination date relating to the shares. |
| |
(2) | This is subject to section 169(1). |
| |
164 | The no linked loans requirement |
| |
(1) | No linked loan is to be made by any person, at any time in period A, to the |
| 20 |
investor or an associate of the investor. |
| |
(2) | In this section “linked loan” means any loan which— |
| |
(a) | would not have been made, or |
| |
(b) | would not have been made on the same terms, |
| |
| if the investor had not subscribed for the relevant shares, or had not been |
| 25 |
| |
(3) | References in this section to the making by any person of a loan to the investor |
| |
or an associate of the investor include references— |
| |
(a) | to the giving by that person of any credit to the investor or any associate |
| |
| 30 |
(b) | to the assignment to that person of a debt due from the investor or any |
| |
associate of the investor. |
| |
165 | The no tax avoidance requirement |
| |
The relevant shares must be subscribed for by the investor for genuine |
| |
commercial reasons, and not as part of a scheme or arrangement the main |
| 35 |
purpose or one of the main purposes of which is the avoidance of tax. |
| |
|
| |
|