Capital gains tax - Individuals

Question 1

EIS reinvestment relief
(Enterprise Investment Scheme)

When does it apply?

Answer 1

When an individual

• Disposes of any asset
• Subscribes for qualifying shares in EIS scheme
• Between 1 year before and 3 years after disposal

Question 2

EIS reinvestment relief
(Enterprise Investment Scheme)

What is the reliefs available?

Answer 2

Relief is the lowest of:

1. the gain
2. amount subscribed in EIS shares
3. any smaller amount chosen

Individual must be resident in UK when gain realised and on reinvestment

The gain is deferred until:

• the disposal of the shares by investor or spouse
• the investor or spouse (after NGNL transfer) becomes non-UK resident within 3 years of the issue of the shares

Question 3

EIS reinvestment relief
(Enterprise Investment Scheme)

When must the relief be claimed?

Answer 3

Within 5 years from 31st January following the end of the tax year in which the disposal occurred
For 2021/22 disposals by 31 January 2028.

Question 4

EIS reinvestment relief
(Enterprise Investment Scheme)

How are gains eligible for BADR charged?

Answer 4

If the asset qualifies for BADR a claim can be made such that gain is taxed in the year of disposal at 10%
If a claim is not made the gain deferred will be taxed at the appropriate rate in force when it becomes chargeable

If a gain deferred was entitled to BADR at the point of deferral, it will still be taxed at 10% when it becomes chargeable

Question 5

EIS reinvestment relief
(Enterprise Investment Scheme)

What rate of relief is available?

Answer 5

30%

Question 6

SEIS reinvestment relief
(Seed Enterprise Investment Scheme)

When is SEIS reinvestment relief available?

Answer 6

Available when:

• An individual disposes of any chargeable asset
• and reinvests in qualifying SEIS share
• which qualify for SEIS income tax (IT) relief

some of the gain arising = exempt from CGT
Any remaining gain is taxable in the usual way
Maximum SEIS exemption

Question 7

SEIS reinvestment relief
(Seed Enterprise Investment Scheme)

How much relief is available under SEIS reinvestment relief?

Answer 7

50% of the lower of :

• the gain or
• the amount reinvested

Maximum CGT exemption = £50,000
Maximum IT exemption = £100,000

Relief = flexible, can claim any amount up to the maximum

Question 8

SEIS reinvestment relief
(Seed Enterprise Investment Scheme)

What is the claim date for SEIS relief?

Answer 8

(Same as EIS reinvestment relief)

Within 5 years from 31st January following the end of the tax year in which the disposal occurred
For 2021/22 disposals by 31 January 2028.

Question 9

SEIS reinvestment relief
(Seed Enterprise Investment Scheme)

What is the planning point for both EIS and SEIS reinvestment relief?

Answer 9

Leave remaining gain equal to AEA and any available losses

Question 10

SEIS reinvestment relief
(Seed Enterprise Investment Scheme)

Withdrawal of the relief if the asset is disposed within 3 years?

Answer 10

If the transaction is not at arms length:
ALL Income tax and CGT relief is withdrawn

If the transaction is at arms length:
IT relief = Lower of all, or 50% x sale proceeds received
CGT relief = (amount of IT relief withdrawn / original IT relief given) x gain