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Where Taxpayers and Advisers Meet

EIS 'rights issue' - additional shares deemed owned since original purchase for IHT?

EIS_Rookie
Posts:3
Joined:Wed Aug 06, 2008 3:55 pm
EIS 'rights issue' - additional shares deemed owned since original purchase for IHT?

Postby EIS_Rookie » Sun Jul 11, 2021 1:52 pm

Hi

I made an EIS-qualifying investment of £10,000 in Company A with shares issued to me 30 months ago, which I believe now qualify for BPR in relation to IHT. I have non-dilution

Company A has recently undertaken a new funding round. As part of my pre-emption rights on the issue of new shares, I was offered a pro-rata allocation of £2,000 which I did invested and again qualified for EIS Income Tax Relief. I had presumed that the second investment would not qualify for BPR until two years after the allocation date of these second batch of shares..

I recently spotted that in the case of a rights issue, the rights shares are deemed to have been owned since the original shares were acquired. If my situation qualified for this concession then I would not have two wait two years for the £2,000 to qualify for BPR and so the full £12,000 would be potentially exempt from IHT.

Can someone advise whether this concession applies to EIS shares and whether the fundraising round has any chance of being considered a rights issue? (And if so, what requirements would need to be in place and what documentation I would need to hold)

Thanks

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