VCM38010 - EIS: deferral relief: shares issued on or after 6 April 1998: introduction and qualifying gains

TCGA92/SCH5B/PARA1 (1)

FA98/S74 and FA98/SCH13 introduced significant changes to the existing rules for CGT deferral relief within the EIS. The new rules apply where the shares are issued on or after 6 April 1998.

Qualifying gains

The relief can be claimed against any chargeable gain arising on the disposal of any asset by a taxpayer if a qualifying investment, see VCM38020, is acquired by them at a qualifying time, see VCM38030, on or after 6 April 1998. The chargeable gain is the gain after mandatory deductions such as indexation allowance (frozen at April 1998 for individuals, see CG17207), retirement relief and reliefs which have to be claimed such as ill-health retirement relief. However, the gain to be invested is that before the deduction of taper relief. Any taper relief is deducted when the gain comes back into charge following a chargeable event, see VCM38200.

Deferral relief can be claimed when a gain previously deferred under the EIS (or under the VCT scheme in respect of shares issued on or before 5 April 2004, see VCM68010 onwards), is brought back into charge. Also, under the new rules, a gain accruing as a result of a claw back of reinvestment relief, see CG62675 onwards, can be the subject of a deferral relief claim. The investor may claim deferral relief on part of his or her gain.