CGT 27 Gains & Losses on EIS, SEIS, Social Enterprise & VCT Shares Flashcards
Disposal of EIS / SEIS shares at a gain….
If EIS/SEIS shares are sold at a gain after more than three years from issue, the gain is exempt provided income tax relief was obtained on the subscription.
EIS/SEIS shares are deemed to be sold on a ______basis.
In respect of shares acquired on the same day, shares on which ____________ are deemed to be sold before shares on which ______________ is claimed
FIFO
income tax relief is not available
a tax reducer
Disposal of EIS / SEIS shares at a loss….
A loss on EIS/SEIS shares is always allowable but is restricted by the amount of income tax relief given and not withdrawn
A gain on shares in a social enterprise …..
is exempt, provided SITR was obtained on the investment and the shares have been held for at least 3 years.
A loss on the disposal of shares in a social enterprise is ….
always allowable, although the cost of the shares is reduced by any income tax relief obtained.
As an alternative to the usual current year offset and carry forward against gains, a loss on EIS/SEIS /Social Enterprise shares can be used …..
S.131 ITA 2007 relief is available on qualifying shares. These are shares which are …….
S.131 claims, other than in respect of EIS/SEIS /Social Enterprise shares, together with other loss relief claims against net income, are restricted to…..
against income if a s.131 claim is made. The loss can be deducted in the calculation of the net income of the current and/or prior year.
either EIS shares or shares in a qualifying trading company which have been subscribed for by the individual.
the greater of £50,000 and 25% of the individual’s adjusted total income.
Disposal of VCT shares…..
For the first £200,000 of VCT shares acquired in a tax year, gains are exempt and losses are not allowable.
Tax Consequences for an individual subscribing in EIS shares
Income tax:
Capital Gains:
Income tax reducer at 30%
Can only reduce income tax liability to nil
Conditions:
Must not be ‘connected’ with the EIS company (30% shares)
Can’t hold existing shares unless subscriber or EIS
Must own for over 3 years
Max £1m (or £2m if knowledge intensive)
Can carry back to prev tax year
Can defer the gain on the disposal of any asset
Gain normally becomes chargeable when the EIS shares are sold
Can defer the lower of:
* Gain on any asset
* Amount subscribed for EIS shares
* Any other amount (to utilise AEA, losses)
Other points
* Can be connected with the EIS company/hold existing shares
* EIS shares must be subscribed for in the period:
– 12 months before, and
– 3 years after
the gain being deferred arises.
- Claim must be made by 5 years from 31 January after the end of tax year of issue of shares
Tax Consequences for an individual selling EIS shares - 3 types
Withdrawal of Income Tax Reducer
Deferred gain becomes chargeable
Gain / Loss on EIS shares themselves
