LLM8210 - Capital gains: Names: reinvestment relief

Until 1997-98, Names could claim reinvestment relief (TCGA92/S164A to TCGA92/S164N) to roll-over gains on the disposal of syndicate capacity or other assets used to back underwriting, to the extent that the gain was reinvested in ‘qualifying investments’ within the ‘qualifying period’.

From 6 April 1998, modified rules for the Enterprise Investment Scheme: re-investment (deferral relief) replaced re-investment relief. Re-investment relief does not therefore apply to roll-over the capital gain on disposals where the Name makes the re-investment, by acquiring eligible shares, on or after 6 April 1998. The deferral relief is given under TCGA92/SCH5B. See CG62900 for details ( LLM10000).

Some of the statutory requirements for EIS deferral relief for 1998-99 onwards are similar to those for re-investment relief. For example, qualifying investments are, broadly, ordinary shares in unquoted trading companies that are carrying on qualifying trades. As before, insurance business is specifically excluded from being a qualifying trade so relief is not available on the acquisition of shares in corporate members of Lloyd’s. Other conditions are different from those for re-investment relief. For example, the relief is only available for acquisitions of newly-issued shares, and the range of excluded trading activities was extended.