Claiming loss relief on EIS investment

ToffeeAddict

Can anyone help, I’m a bit confused. I invested £2k in a small company in 2018 and that investment was eligible for tax relief under EIS though I wasn’t aware at the time so I didn’t make a claim. Now, the company has confirmed it is winding up and the shares are worthless and advised I can claim loss relief. I think I have worked out that to do this I need to submit for SA108. However, currently my employment status means I don’t need to do self assessments so I am not sure how I would submit SA108, and whether I would need to submit a full self assessment in order to be able to make this claim.

Dazed_and_C0nfused

You cannot submit that part of a tax return on its own.

masonic

HMRC asked me to register for Self Assessment to get VCT tax relief some years ago. I expect they'll do likewise for your situation.

nick1234

masonic said:

HMRC asked me to register for Self Assessment to get VCT tax relief some years ago. I expect they'll do likewise for your situation.

I am paye and need to claim vct relief, i was told they can adjust your tax code or send you a refund if u send them your p60 and relevant certs.  Im not expecting to do self assessment for a one off claim

nick1234

Venture Capital Trust

You should claim Income Tax relief in your Self Assessment tax return for the tax year in which the shares were issued.

You do not have to wait until you send in your tax return to get the benefit of the relief. You can do this by asking HMRC to make an adjustment to your tax code or requesting a tax refund.

https://www.gov.uk/guidance/venture-capital-schemes-tax-relief-for-investors#how-to-claim-relief

masonic

That's interesting, but it doesn't say you do not have to self assess, just that you can benefit from the relief before you submit your tax return. When I wrote to HMRC to claim my relief, they sent me a tax calculation and cheque then subsequently registered me for SA. This was about 6 years ago, so things may have changed, but the info above suggests you would still need to complete a tax return, but can ask HMRC to apply the relief early.

If you are never going to invest in such a scheme again, and don't want to be on SA, it might be worthwhile telling HMRC it's a one-off if you haven't already. This also applies to the OP.

mostwelcome

If you didn't claim tax relief on the initial investment – you cannot claim loss relief.

This is a strange rule IMO but true

spider42

mostwelcome said:

If you didn't claim tax relief on the initial investment – you cannot claim loss relief.

This is a strange rule IMO but true

You can only claim Disposal Relief if Income Tax relief was claimed. Disposal Relief exempts gains on EIS shares from CGT, and so isn't applicable here.

Loss relief is separate, and definitely doesn't require Income Tax relief to have been claimed. If EIS Income Tax relief was claimed (and not subsequently withdrawn), then the shares are automatically treated as qualifying shares. But if Income Tax relief wasn't claimed, then you can still claim loss relief if the company satisfies various conditions (and if the company actually qualified for EIS, but the relief just wasn't claimed by the investor, then it is a virtual certainty that these conditions would be met).

See https://www.gov.uk/government/publications/negligible-value-claims-and-income-tax-losses-on-disposals-of-shares-you-have-subscribed-for-in-qualifying-trading-companies-hs286-self-assessment-he/hs286-negligible-value-claims-and-income-tax-losses-on-disposals-of-shares-you-have-subscribed-for-in-qualifying-trading-companies-2023#in-what-type-of-company-should-i-have-subscribed-for-shares for full details.