CGT 26 EIS, SEIS and Social Investment Relief Flashcards
EIS reinvestment relief …..
is available when a taxpayer sells any type of asset and subscribes for qualifying EIS shares
What’s the cap on EIS reinvestment relief?
There is no cap on the amount of relief, unlike the EIS tax reducer for income tax.
For EIS reinvestment relief the amount deferred is…
the lowest of:
* the gain;
* the amount invested in EIS shares;
* the amount specified in the claim.
The amount of relief can be specified to utilise the annual exempt amount
For EIS reinvestment relief the gain deferred is frozen, and crystallises in the year of a chargeable event such as:
- sale of EIS shares;
- becoming non-UK resident (if within three years of issue of shares);
- shares ceasing to be eligible (excluding flotation);
Conditions in order to claim EIS reinvestment relief
the taxpayer must be UK resident
shares must be acquired 12 months before or three years after the disposal of the original asset.
EIS reinvestment relief: The claim must be made by….
The claim must be made no later than five years from 31 January after the end of the tax year of the issue of the shares.
EIS reinvestment relief: What if the taxpayer is connected to the company?
It is still possible to claim EIS reinvestment relief if the taxpayer is connected to the company, although this would deny the income tax relief.
EIS reinvestment relief: Can you get other reliefs as well?
Where a gain is eligible for both business asset disposal relief and EIS reinvestment relief, an individual must choose either to claim BADR or to claim EIS reinvestment relief.
However, if the original disposal takes place on or after 3 December 2014, business asset disposal relief will also be available when the frozen gain becomes chargeable.
Where a gain is eligible for both investors’ relief and EIS reinvestment relief, if EIS reinvestment relief is claimed the deferred gain will not be eligible for investors’ relief when
it comes back into charge.
SEIS reinvestment relief is available when….
The gain relieved is….
a taxpayer sells any asset and claims SEIS income
tax relief in respect of the same tax year.
The gain relieved is exempt from CGT.
The gain relieved is 50% of the ‘available SEIS expenditure
SEIS reinvestment relief: The ‘available SEIS expenditure’ is …..
the lowest of:
* the gain;
* the amount invested on which SEIS income tax relief is claimed;
* the amount specified.
The maximum SEIS expenditure eligible for relief is …..
If the SEIS shares are sold
£100,000 (maximum investment qualifying for SEIS income tax relief).
within three years, the relieved gain becomes chargeable and is charged to tax in the tax year the shares were issued.
Social enterprise reinvestment relief is ……
available in respect of gains arising on any asset where the individual makes an investment eligible for social investment tax relief (SITR)
Social enterprise invetment relief:
The gain is deferred until ….
The amount of the gain that can be deferred ……
a chargeable event, eg the social enterprise investment is sold or
the social enterprise ceases to meet the requirements of the scheme.
is the lowest of:
* the gain;
* the amount invested in the social enterprise;
* the amount specified
The maximum amount of gains which can be deferred in a tax year is £1 million.
Multiple reliefs with social enterprise investment?
Where a gain is eligible for both social enterprise reinvestment relief and business asset disposal relief, an individual must choose either to claim social enterprise reinvestment
relief or to claim BADR.
If the original disposal takes place on or after 3 December 2014, business asset disposal relief will also be available when
the frozen gain becomes chargeable.
