Investing
INVESTING Individual Investor Financial Adviser Institutional Investor FUNDING Entrepreneur Real Estate
Hide
Open
Go back to EIS guide
Other beneficiaries and EIS

Other beneficiaries and EIS shares

Understanding the tax implications when the recipient of EIS shares isn’t married to the original investor.

When shares are gifted

When investors gift shares to beneficiaries that aren’t spouses, it’s considered a sale of shares for tax purposes.

Tax implications of the gift
for the original investor
Tax implications for the recipient
Income tax reliefWhere shares are transferred within
three years of investment, income tax
relief claimed is repayable.
No implications after gift.
Capital gains
tax relief
Where shares are transferred within
three years of investment, growth will
be subject to capital gains tax.
Any growth in value after transfer is
no longer from from capital gains tax.
Loss reliefIf the shares have fallen in value
between investment and gift,
loss relief can be claimed against
income or gains.
Loss relief is available against capital
gains only. The loss is based on the fall
in value between the date of gift to
the date of sale.
Capital gains
deferral relief
Deferred gains become
chargeable immediately.
No implications after transfer.
Inheritance tax
relief via BR
If the investor dies within seven
years of making the gift, inheritance
tax may be payable. However, if the
investor held the shares for at least
two years before making the gift and
the recipient still owns them when the
investor dies, no inheritance tax is due.
The shares will need to be held for
a further two years to be free from
inheritance tax as part of the
recipient’s estate.

When shares are inherited

Tax implications of transferring shares when the original investor dies.

Tax implications for the original
investor on death
Tax implications for the recipient
Income tax reliefNo implications – income tax relief
remains even if death is within
three years.
No implications after transfer.
Capital gains
tax relief
No implications – growth to the
date of death is tax-free, even if
the death is within three years
of investment.
Any growth in value after the
transfer is no longer free from
capital gains tax.
Loss reliefNo implications.Loss relief is available against capital
gains only. The loss is based on the
fall in value between the date of death
and the date of sale.
Capital gains
deferral relief
No implications – deferred gains are
eliminated on death.
No implications after transfer.
Inheritance tax
relief via BR
The shares will be free from inheritance
tax provided the shares have been held
for two years on death.
The shares will need to be held for a
further two years to be free from inheritance
tax as part of the recipient’s estate.

Please note: beneficiaries who are married are treated differently for tax purposes.