A touch confused about EIS in general & the additions (in terms of non-taxable income) I get back from it. I’ve submitted two EIS forms to HMRC, one for Freetrade (£200 investment) and one for $otherfintech (£80) worth. My EIS additions on the gov personal tax account website is, however, £420.
I submitted the Freetrade EIS form (as mentioned, £200 investment) and got £300 EIS addition. My $otherfintech EIS form was processed recently, and:
It’s confusing, I had the same questions. I will write what I understand, someone with better knowledge can correct me.
Basically the amount shown by HMRC is your allowance, the money you earn without paying tax.
You invested £200 in FT x30% (EIS) = £60 that you will get “refunded”.
You pay around 20% in Tax from your income, so in order to get back £60, your allowance needs to be increased x5 so £60 x5 = £300 increase of your allowance.
Same applies with your other investment:
£80 x30% = £24 x5 = £120 increase.
EDIT: I think its’ better to choose the previous tax year, when completing the form, so you will get an actual refund, rather than a change in your PAYE code.
