EIS Deferral Relief - take advantage of the 18% rate

Extensive changes have been made to the way that capital gains are taxed on individuals from 6 April 2008. Indexation allowance and taper relief have been scrapped, and a flat rate of capital gains tax (CGT) of 18% has been introduced.

Previously, the rate of CGT payable depended on the nature of the asset and the period for which it had been held, with rates of CGT varying from an effective rate of 10% up to 40%. The change to the CGT regime has, however, provided a planning opportunity for individuals who choose to invest in the Enterprise Investment Scheme (EIS).

If you have paid CGT at a rate higher than 18% on chargeable gains arising over the past three years, it may be possible to claim a repayment from HMRC, defer these gains until a later date and pay CGT at the prevailing rate (currently 18%), by taking advantage of EIS deferral relief.

There are a range of reasonable risk EIS strategies now available and a number advantages of investing in shares qualifying for EIS relief. As well as CGT deferral relief, an investment in EIS shares may qualify for income tax relief of up to £100,000 per year. Investments may also qualify for inheritance tax business property relief. If you would like to discuss the possibility of paying a reduced rate of CGT on gains which you have already realised, or the merits of investing in EIS shares generally, please contact one of our specialists.

Contact details
Email: Katherine Bullock
Tel: +44 (0)113 289 4000