VCM30200 - EIS disposal relief: example
- July 1994 an investor subscribes £150,000 for 100,000 shares in an EIS company.
- Maximum Income Tax relief of £20,000 is given in the tax year 1994-95.
- January 2000 all the shares are sold for £270,000.
The chargeable gain is calculated as below.
| Disposal proceeds |
£270,000 |
| Less cost |
£150,000 |
| Unindexed gain |
£120,000 |
| Less indexation to April 1998, see CG17207 |
£19,350 |
| Chargeable gain |
£100,650 |
The TCGA92/S150A(3) formula is:
|
1. | = |
2. Amount of tax relief | = |
3. £20,000 |
| B | Subscription x Lower rate of tax 1994-95 | £30,000 |
The chargeable gain exemption is restricted to:
£100,650 x 2 / 3 = £67,100
The chargeable gain before taper relief becomes £100,650
- £67,100 = £33,550.
