How to Claim EIS Loss Relief

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How Can I Claim Loss Relief on EIS and SEIS Investments?

What is Loss Relief?

Loss relief allows an investor to offset a loss made on an EIS or SEIS company against either their capital gains tax bill or their income tax bill.

If you've made an EIS or SEIS investment that results in being sold at a loss (or is liquidated), you may be able to claim tax relief on losses.

To qualify for relief, the value of an investment at sale must have fallen below the ‘net cost’.

What is Net Cost?

The net cost is the amount of capital invested, minus whatever you may has been previously claimed in income tax relief. For example, if you invested £30,000 into an EIS-qualifying investment and you then claimed upfront income tax relief of £9,000 (equal to 30% of the amount you invested), the net cost of that investment would be £21,000.

How much Tax Relief can I claim?

The amount of relief an individual tax payer can claim is worked out by multiplying the value of their effective loss and their marginal rate of income tax.

Continuing the above example, the net cost would be £21,000. Depending on an individuals tax rate (20%, 40% or 45%) the rate is then multiplied by that rate, giving you your end loss relief amount.

E.g. £21,000 x 45% = £9,450.

What other information do I need to provide?

What tax is Loss Relief deductible from?

Loss relief can be claimed against Income Tax and Capital Gains Tax. It can be claimed for via your Self-Assessment Form.

In your claim you should specify the source of the loss, the tax year of the loss and the tax year or years to which the loss should be applied.

You must make the claim within one year of the 31st January following the end of the tax year in which the loss occurred. E.g. If the loss occurred in November 2019, you can claim no later than during the January 2022 Tax Filing Window.

Please note, RLC Ventures does not provide Tax Advice and the above information should not be treated as such. Please consult a Tax Advisor if you are seeking professional advice.