EIS funds - investments with a difference

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Capital Gains Deferral Relief

There is a deferral of unlimited capital gains that have arisen within thirty-six months before or will arise within twelve months of the Investment in an Investee Company made through a Fund.

In other words, although the amount on which EIS Relief and the Capital Gains Tax Exemption are available is limited to £500,000, there is no limit on the amount of capital gains that can be deferred.

The Investor needs to invest an amount equivalent to the capital gain in investments made through the Fund.

Example - based on CG rate of 28%:

Initial Investment (net of charges) 50,000
EIS Relief @ 30% (15,000)
Capital Gains Deferral (14,000)
Net Cost of Investment 21,000

Please be aware that VCTs (Venture Capital Trusts) no longer qualify for CGT Deferral.