Exemptions and reliefs for CGT

Question 1

EIS reinvestment relief

Answer 1

1. Disposal of chargeable asset
2. Reinvest proceeds wholly for cash in unquoted shares in EIS scheme.
3. The amount reinvested in EIS shares will be deducted from the capital gain (Gain will be deferred).

Question 2

Selling EIS shares

Answer 2

1. Any gain deferred due to their purchase will become chargeable
2. Sold within 3 yrs of purchase - Capital gain is chargeable and capital loss is allowable
3. Sold after 3 years of purchase gain is EXEMPT but loss is allowable.

Question 3

SEIS reinvestment relief

Answer 3

1. Gain is exempt

2. Must be UK Resident

Question 4

SEIS gain chargeable in 3 Cases

Answer 4

1. Investor disposes the shares within 3 years.
2. Investor becomes non- resident within 3 years of issue of shares.
3. Company ceases to be a qualifying company

Question 5

SEIS gain is lower of

Answer 5

1. 50% of capital gain.

2. 50% of cost of SEIS shares purchased.

Question 6

E.R is available on disposal of a building if all 3 conditions apply

Answer 6

1. Individual disposes of their share in a partnership of PSC.
2. Intention to no longer participate in the business using the premises.
3. Premises and shares owned more than 2 years.

Question 7

What is Incorporation relief?

Answer 7

Individual selling his business to a company

Question 8

How can the gain be deferred?

Answer 8

Under 3 conditions:

1. Transfer of business as a going concern.
2. All assets must be transferred except cash.
3. Consideration must be wholly or partly in shares, more than or = to 80%.

Question 9

How much gain to defer?

Answer 9

If consideration in shares:
Full capital gain deferred

If consideration in shares + cash:
Gain to defer = Full c. gain x (M.V of shares) / M.V of total consideration)