{"id":15667,"date":"2022-03-16T17:39:57","date_gmt":"2022-03-16T17:39:57","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=15667"},"modified":"2025-09-03T17:57:47","modified_gmt":"2025-09-03T16:57:47","slug":"how-do-i-claim-eis-loss-relief","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/how-do-i-claim-eis-loss-relief\/","title":{"rendered":"How do I claim EIS loss relief?"},"content":{"rendered":"\n

You\u2019ve heard the saying, \u201cyou win some, you lose some\u201d<\/em>? Well, welcome to the world of startups. Quite literally, there are instances where you make money and others where you lose it all. If you take the leap, you accept the risk that comes with investing in startups and early-stage businesses. <\/p>\n\n\n\n

Startups need capital, a.k.a money, to grow and expand. Therefore, they need people to invest in them. Investing essentially means buying and then owning parts of a company. These \u201cparts\u201d are called shares<\/a>. If the company does well, the shareholders can end up making money. This is because once the value of the company increases, the value of the shares also increases. <\/p>\n\n\n\n

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What is EIS?<\/h2>\n

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To encourage people to invest their money, the UK government implemented a scheme called the Enterprise Investment Scheme<\/a> (EIS).<\/p>\n

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EIS is a scheme which offers tax relief opportunities when you invest in startups and early-stage businesses. As these younger companies can be a riskier investment, there are some incentives and also some protections in place for the investors in the form of tax relief and loss relief.<\/p>\n\n <\/div>\n<\/div> \n\n

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Why invest in an EIS-eligible company?<\/h2>\n\n\n\n

Why would you invest in a startup, you ask yourself? Although there\u2019s risk involved, you\u2019re able to potentially support a business you believe in right from the start, as it grows and develops. If the company you invested in succeeds, you\u2019ll probably make some money. However, there can be instances where the startup fails or you end up selling your shares in the company at a loss. <\/p>\n\n\n\n

With any investment you make, you have to make sure it\u2019s the right financial decision for you. You won\u2019t be able to predict what will happen (hello COVID-19\ud83d\udc4b ) but if there is a case where the EIS company you invested in fails, you can claim EIS loss relief. <\/p>\n\n\n<\/div> \n\n

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Once you\u2019ve kept your shares in a trading company for 3 years from the date of issue, you\u2019re eligible for the 30% income tax relief<\/a>.<\/p>\n\n <\/div>\n <\/div>\n <\/div>\n\n \n \n

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If you don\u2019t keep the shares for at least 3 years and you still claim the income tax relief, it will be withdrawn by HMRC.<\/p>\n\n <\/div>\n <\/div>\n <\/div>\n\n \n \n <\/div>\n<\/div> \n\n

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What is EIS loss relief?<\/h2>\n\n\n\n

If the EIS business fails, you\u2019ll receive loss relief, which acts as added protection when buying riskier shares. <\/p>\n\n\n\n

EIS loss relief is a type of relief available when you sell your shares at a loss. This means that you sold your original shares for less than what you bought them for. Because you lost money from your investment in an EIS company, you\u2019re eligible for tax relief. Tax relief allows you to reduce the amount of tax you pay the government. <\/p>\n\n\n\n

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