Although a gain on a disposal of EIS shares is generally exempt from capital gains tax (see E3.190), relief is not refused for a loss on such a disposal1. Where the calculation on the disposal of EIS shares results in a loss, before any adjustment for income tax relief, the consideration for the shares has to be reduced by the amount of any relief given and not withdrawn2. In some circumstances this may convert the loss into a chargeable gain, although the gain would then be exempt as illustrated in the example below.
Example 1
Edward purchased 1,000 shares in B Ltd on 1 November 2018 for £500,000 and obtained EIS relief of £150,000 (£500,000 × 30%). On 1 September 2019 Edward sold the shares
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