Capital Gains Tax (CGT) is a tax applicable where you sell an asset for more than it cost you. Read on to find out more.
Investing the gains into an Enterprise Investment Scheme (EIS) can allow you to defer when the capital gains tax is due and even opens the possibility of reducing the amount payable. For every £1 you invest in an EIS investment you can defer indefinitely the CGT payable on £1 of gain you make from the sale of your shares – this is known as deferral relief. The gain then only becomes taxable when you sell or transfer your EIS investment. An EIS investment also qualifies for income tax relief which reduces your liability by 30% of the amount you invest.
With clever planning the EIS investments can be sold over a number of years so that the gain is equivalent to the annual tax free amount of capital gains and thus reduce the overall tax payable.
Finding EIS Investment Schemes
There are various companies set-up which market the shares of qualifying EIS companies. Contact us and we can help put you in touch.