EIS guide

58 59 CASE STUDIES CASE STUDIES 3 Deferring your capital gains Edward, 58, made a capital gain of £100,000 on the sale of a property in the 2017/18 tax year. He had already used his CGT annual exempt amount for this tax year and the property was not his main residence. He has therefore already paid a CGT bill of £28,000 in January 2019. SOLD Edward sold his property in 2017/18 tax year and made £100,000 capital gain £28,000 CGT bill £28,000 CGT bill* EIS investment £100,000 (2019/20 tax year) Edward’s EIS investment allows him to reclaim the CGT from HMRC and defer it** *Edward can also benefit from £30,000 income tax relief assuming he has sufficient income tax capacity. **CGT is deferred until it comes back into charge at a later date if he disposes of the EIS-qualifying shares. Michelle, 68, has a significant income tax liability for 2019/20 and is concerned about her increasing IHT liability 100% IHT exemption on the value of the investment 4 Income tax and IHT liabilities Michelle is looking for a solution to resolve two issues - one from the past and the other for the future. EIS investment made in 2020/21 £100,000 £30,000 income tax relief that can be carried back to 2019/20 When Michelle dies she still holds the investment BR qualification 2 years