R03 EIS, SEIS and VCTs: free practice questions

1. Question 1 of 5

   What income tax relief is available on EIS subscriptions in 2026/27?

   Option A: 30% on up to £1m a year, or £2m for knowledge-intensive companiesOption B: 50% on up to £200,000 a year, as a tax reductionOption C: 30% on up to £200,000 a year, the same as SEISOption D: 20% on up to £200,000 a year

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   The answer is A: 30% on up to £1m a year, or £2m for knowledge-intensive companies

   EIS relief is 30% of the amount subscribed, up to £1m a year (£2m where the excess goes into knowledge-intensive companies), given as a tax reducer. It can be carried back to the previous year.

   Why the other options are wrong

   B

   Those are the SEIS figures.

   C

   The EIS limit is £1m (£2m for knowledge-intensive companies).

   D

   Those are the VCT figures.

2. Question 2 of 5

   Raj invested £50,000 in EIS shares and got £15,000 of income tax relief. Four years later the company fails and the shares are worthless. He's a higher-rate taxpayer. How much tax can he save by setting the loss against income?

   Option A: £20,000Option B: £14,000Option C: £8,400Option D: £35,000

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   The answer is B: £14,000

   Allowable loss = £50,000 − £15,000 = £35,000. Set against income at 40% saves £14,000. Against gains, it would save only up to 24%.

   Why the other options are wrong

   A

   The loss is reduced by the income tax relief already given.

   C

   Relief against income is at 40%, not 24%.

   D

   That's the allowable loss, not the tax saved.

3. Question 3 of 5

   What is the maximum combined tax relief from EIS income tax relief and deferring a gain taxed at 24%?

   Option A: 44%Option B: 62%Option C: 54%Option D: 30%

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   The answer is C: 54%

   EIS gives 30% income tax relief plus deferral of a gain otherwise taxed at up to 24%: 54% in total. SEIS can give 62% (50% relief plus 24% on half the reinvested gain).

   Why the other options are wrong

   A

   That combines 20% and 24%.

   B

   62% is the SEIS combination.

   D

   That ignores the CGT deferral.

4. Question 4 of 5

   Which condition must a VCT meet?

   Option A: No more than 25% in any one companyOption B: It must be an unlisted close company run by its managersOption C: Its investee companies must have assets under £350,000Option D: At least 80% of its investments must be in qualifying holdings

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   The answer is D: At least 80% of its investments must be in qualifying holdings

   VCTs must be listed, not close, approved by HMRC, with at least 80% of investments in qualifying unlisted trading companies (including AIM) and no more than 15% in one company. The VCT pays no tax on its gains.

   Why the other options are wrong

   A

   The single-company limit is 15%.

   B

   A VCT must be listed and not close.

   C

   The investee asset limit is £30m before and £35m after.

5. Question 5 of 5

   Can EIS income tax relief be carried back?

   Option A: Only for knowledge-intensive companiesOption B: Yes, up to three yearsOption C: Yes, to the previous tax year, within that year's limitOption D: No, only in the tax year the shares are issued

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   The answer is C: Yes, to the previous tax year, within that year's limit

   Up to the annual limit invested can be carried back and treated as subscribed in the previous tax year, provided that year's limit isn't exceeded.

   Why the other options are wrong

   A

   Carry back is available generally.

   B

   Carry back is one year.

   D

   Relief can be carried back to the previous year.

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