Taxes Consolidation Act 1997 section 508M

Disposals of shares

Section 508M provides for the withdrawal or reduction of EIIS relief where an individual disposes of eligible shares during the compliance period.

• Where shares are disposed of other than at arm's length during the compliance period, the full relief is withdrawn; where they are sold at arm's length, the relief is reduced by the sale proceeds received.
• Transfers between spouses or civil partners living together are exempt from withdrawal, but if the transferee later disposes of the shares to a third party within the compliance period, relief is clawed back from the transferee.
• Where an individual holds both relieved and unrelieved shares of the same class, any disposal is treated as a disposal of the relieved shares first, and earlier issues are treated as disposed of before later issues (FIFO basis).
• Bonus shares forming part of a new holding under a reorganisation are treated as shares on which relief was given, and any disposal of the new holding is treated as a disposal of the original EIIS shares.