Income Tax Act 2007

209 Disposal of shares U.K.

(1) This section applies if—

(a) the investor disposes of any of the relevant shares,

(b) the disposal takes place before period A ends, and

(c) EIS relief is attributable to the shares.

(2) If the disposal is not made by way of a bargain made at arm's length, the EIS relief attributable to the shares must be withdrawn.

(3) If the disposal is made by way of a bargain made at arm's length, the EIS relief attributable to the shares must—

(a) if it is greater than the amount given by the formula set out below, be reduced by that amount, and

(b) in any other case, be withdrawn.

F1 The formula is—

where—

R is the amount or value of the consideration received by the investor for the shares, and

[F2 EISR is the [F3 EIS original rate].]

(4) This section does not apply to a disposal of shares to which an amount of EIS relief is attributable if—

(a) the disposal was made by an individual (“A”) to another individual (“B”), and

(b) A and B were married to, or were civil partners of, each other and living together at the time of the disposal.

(5) Section 246 contains rules for determining which shares of any class are treated as disposed of for the purposes of this section if the investor disposes of some but not all the shares of that class which are held by the investor.

[F4 (6) Nothing in this section applies to a disposal of shares occurring as a result of the investor’s death.]

Textual Amendments

F1 Formula in s. 209(3) amended (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 14(a)

F2 Words in s. 209(3) substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 14(b)

F3 Words in s. 209(3) substituted (13.10.2011) (with effect in accordance with s. 42(7)(8) of the amending Act) by Finance Act 2011 (c. 11), s. 42(3)(a)(6); S.I. 2011/2459, art. 2

F4 S. 209(6) inserted (with effect in accordance with Sch. 7 para. 22 of the amending Act) by Finance Act 2012 (c. 14), Sch. 7 para. 17