ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change has no implications for the amount of tax paid, who pays it or when. It affects (in principle but not in practice) only administrative matters. Change 55: EIS: share transfers between spouses or civil partners: section 245
This change expands the assumptions that are made in relation to transfers between spouses or civil partners of shares to which EIS relief is attributable. Section 245(2)(b) and (d) and subsection (3) ensure that the step in shoes treatment works in all situations in relation to any subsequent event.
Section 304(2)(a) of ICTA provides that the transferee is treated as though he or she had subscribed for the shares. Section 245(2)(b) of this Act makes it explicit that the transferee is treated as having subscribed for the shares the amount that was subscribed by the transferor.
Section 304(2)(b) of ICTA says that the transferee’s liability to income tax is treated as having been reduced for the same year as the transferor’s liability to income tax was reduced. Section 245(2)(d) of this Act makes it explicit that this deemed reduction in the transferee’s liability should be the same as the reduction obtained by the transferor.
Change 48 discusses the clarification of what the gross amount is in cases where, for instance, the transferor receives value from the issuing company before the transferor obtains EIS relief. Section 245(3) of this Act provides that the effect on EIS relief in these circumstances is unaffected by a transfer of shares between a husband and wife and civil partners. It does this as follows:
	Subsection (3)(a) carries over to the transferee any reduction in the EIS relief attributable to the shares in respect of the transferred shares.
	Subsection (3)(b) provides that the transferee’s treatment will be the same as the transferee’s would have been in cases where sections 210(3), 220(2) and 229(3) are relevant. These are concerned with the reduction of EIS attributable to relevant shares before EIS relief is obtained in cases involving disposal, the receipt of value by the investor and the receipt of value by other persons. Since these are three distinct cases, the required effect in subsection (3) is achieved by cross-referring to those provisions rather than attempting to reproduce their contents.