HMRC Limits on EIS/SEIS. How to claim tax relief.

HMRC limits

The amount of tax relief available under the EIS is limited to the amount of tax you have paid with an absolute annual limit of £300,000 income tax relief for EIS and £50,000 for SEIS. This means that in order to gain full income tax relief, you should not invest more than £1million in EIS or £100,000 in SEIS for each tax year, £1million per individual and for SEIS. SEIS/EIS Income tax relief and SEIS Captial gains reinvestment relief can be carried back to the previous tax year.

Therefore, assuming no EIS investments have been made in previous years, the effective limit for the 2015/2016 tax year EIS is £2,000,000 (calculated as £1,000,000 for the 2015/2016 tax year and £1,000,000 carried back to the 2015/2016 tax year).

For SEIS the limit is £200,000 calculated as £100,000 for each of 2014/15 and 2014/2015 tax years.

Income tax relief is further limited to the amount of income tax paid by you in the year that it’s claimed. You can’t claim back more tax than you have paid. This includes income tax deducted at source on salary and bonuses but not the tax treated as deducted at source from dividends. There is no lifetime limit for EIS, but you should note that existing funds being reinvested also count towards your annual limits.

How to claim tax relief

You are only able to claim relief when your Contributions to Kuber have been invested by the Managers in the underlying Investee Companies and you have received an EIS3 certificate. The EIS3 certificate will be issued once companies have met the qualifying rules and these will be collated and dispatched by Kuber at regular intervals.

Your tax claim should be made on your self assessment tax return for the tax year in which the EIS Shares were issued. If the shares were issued in a previous year, and/or if the claim is for Capital Gains Deferral Relief, the claim part of the form must also be completed and sent to your tax office.

If you have an EIS3 form for an investment in a tax year that has not ended and for which you have not yet received a tax return, you can request a change to your PAYE tax code, or an adjustment to any self assessment payment on account due. However you’ll still have to make the claim itself on your tax return.

You can claim for relief up to five years after January 31st following the tax year in which the investment was made. Once you have made your first income tax relief claim, it’s expected that HMRC will issue you with a self assessment tax return every year. In some cases it can take eighteen months or more from the time Contributions are invested in the EIS Portfolios to claim the income tax relief.