How to claim EIS tax relief
With Enterprise Investment Scheme (EIS) investments you can claim up to 30% income tax relief – potentially as much as £600,000 a year.
But how do you go about claiming the tax relief in practice?
Below we give a simple step-by-step guide, which you can use as a starting point, although it is not tax advice nor a personal recommendation. Tax rules change and benefits depend on circumstances. If you’re in doubt, you may want to seek advice from an accountant.
What you need to have on hand to claim EIS tax relief
You will normally claim EIS tax relief when you complete your tax return. You will be asked some information which is included in your EIS3 certificates.
These are certificates 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. In the less common event that you invested in an “Approved EIS fund”, the fund manager will send you a single EIS5 certificate.
Both EIS3 and EIS5 certificates 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
What you do next will depend on how you submit your tax return (by post or online). There is also an alternative method to be used in certain circumstances – for instance, if you do not wish to claim tax relief for the same tax year for which you’re submitting the return, or if you don’t habitually file a tax return. The information below is current as per the 2022/23 tax year.
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 the “Other tax reliefs” section on page Ai 2, in box 2 (“Subscriptions for shares under the Enterprise Investment Scheme”) please write the total amount of all your EIS subscriptions on which you wish to claim tax relief.
Please note, HMRC doesn’t require you to submit the EIS3 or EIS5 certificates for the investments on which you are claiming tax relief. It might, however, ask you to produce them later, 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
- In section 3, “Tailor your return”, you will need to answer “Yes” to the question on other tax reliefs:
- In section 4, “Fill in your return”, under “Other tax relief and deductions” 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.
Please note, HMRC doesn’t always require you to send the EIS3 or EIS5 certificates 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 or EIS5 certificate – and send it to your HMRC tax office.
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 or EIS5 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.
As mentioned above, this is not tax advice. If in doubt, please consult HMRC’s full guidance on the subject, or speak to your accountant.