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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a question concerning CGT Deferral Relief I have

Resolved Question:

Hi
I have a question concerning CGT Deferral Relief
I have a Capital Gain in last tax year of 700k so facing a 28% CGT bill circa 195k
I have invested 185k in EIS and SEIS schemes and will be seeking Income Tax relief at 30% and 50% respectively however
When it comes to the Deferral Relief I am confused about how much of the 185k investment I can keep back until the reinvestments hopefully mature?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Can you explain what you mean by "When it comes to the Deferral Relief I am confused about how much of the 185k investment I can keep back until the reinvestments hopefully mature?"
Customer: replied 1 year ago.
Hi Tony
My understanding is that the Capital Gains Tax on gains on my previous investment can be deferred if I invest in EIS or SEIS qualifying shares. (Reinvestment Relief and Deferral relief). And this becomes due when the qualifying shares are disposed of or, if earlier, if other events trigger it.I don’t understand if the amount deferrable is the entire 185k investment or if it is the value net of any income tax relief or indeed if it is only 28% of the new investment that can be deferred.I hope this is a little clearer
Expert:  TonyTax replied 1 year ago.
Thanks for the clarification. To the extent that you invest in EIS, you defer the gains (not the tax) to that value until an event in the future revives them to be taxed at that time. See HS297 here. To the extent that you invest in EIS, 50% of the gains (not the tax) are exempted from CGT altogether. See HS393 here. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Ok I think I have got it . . . .so in simple terms from a cashfow perspective under EIS as I am deferring the gain which in practice defers the tax payment of 28% of the gain until a future event.
Expert:  TonyTax replied 1 year ago.
When the deferred gains revive, they will be taxed at the rate of CGT in force then.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15763
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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