Pixel

CGT Reliefs For The Investor

Gary Green
Gary Green
March 29, 2016

In addition to the stated income tax reliefs for investing in an SEIS, there are Capital Gains Tax (CGT) reliefs which for some taxpayers can be even more valuable.

What is commonly referred to as the gold standard in CGT relief is entrepreneurs' relief. Where entrepreneurs' relief is available CGT of 10% rather than the normal rate of 28% is due.

However, where the qualifying conditions for the SEIS are met there is a 100% exemption from CGT on the sale of shares more than three years after the date on which they were issued.

Conditions & Exemptions

Interestingly, if the shares were sold before the three years condition is met, they may still qualify for entrepreneurs’ relief. In order to claim CGT disposal relief, taxpayers must have received income tax relief on the cost of the shares. If no claim to income tax relief is made, then any other sale of the shares will not qualify for exemption from CGT.

There is also an additional exemption from CGT, known as CGT: reinvestment relief. This applies where assets are sold and all or part of the gain is invested in shares that qualify for SEIS. Reinvestment relief is available at 50% of the CGT on gains reinvested within the SEIS.

The maximum gain to be relieved is capped at £100,000, resulting in a maximum CGT relief of £14,000, and the relief will be withdrawn if the SEIS relief is ultimately withdrawn.

This shows just how important it is to get professional advice when making an SEIS or EIS investment and how to maximise the available reliefs.

Worked Example

  • Bernard sells an asset and makes a profit (before exemption) of £50,000.
  • He invests all this £50,000 profit in qualifying SEIS shares.
  • Bernard will be able to claim a reduction of £25,000 (50% of the amount invested in SEIS) in the chargeable gain on the shares.
  • This would save Bernard 14% tax i.e. 50% of the current capital gains tax rate of 28%.

Although it is not strictly an SEIS relief, an SEIS investment will normally qualify for 100% relief from inheritance tax. This is assuming the usual conditions are met and the investment has been held for two years.

If you'd like to discuss how these schemes can offer you capital gains tax reliefs, please get in touch.

Interested in our services?
Fill in your details and a member of our experienced team will be in touch shortly to discuss your needs.
We adhere to strict GDPR rules and do not reveal or sell your data to any third-parties. For more, please read our Privacy Policy.
Latest Insights
October 13, 2021
What is the Restart Grant and How Do I Apply?

The COVID-19 global pandemic had a detrimental effect on many businesses, but there were some sectors...

September 27, 2021
Choosing The Correct VAT Scheme For Your Business

Choosing the right VAT scheme is an important step for small business owners and can have a considerable...

September 21, 2021
How to Claim EIS Income Tax Relief in 2021

If you need to know how to claim EIS income tax relief and enjoy what is...

September 2, 2021
Recovery Loan Scheme - What Is It and How Do I Apply?

As businesses seek to re-open and recover from the global pandemic, there are various forms of...

August 16, 2021
The Super-Deduction Scheme - How Does It Work?

You may have heard the term 'super-deduction' recently and wondered if you could be affected by...

August 12, 2021
The Tax Benefits of Non-Domiciled Status for UK Residents

Having a Non-Domiciled Status if you reside in the United Kingdom can have great benefits for...

July 9, 2021
Stamp Duty Land Tax (SDLT) Surcharge for Non-UK Residents

Stamp Duty Land Tax (SDLT) rates have changed again for non-residents buying a home in England...

July 7, 2021
How Is Cryptocurrency Taxed & Do I Need to Fill A Self-Assessment?

Cryptocurrency may live online with no government control or borders, but if you are in the...

July 5, 2021
Venture Capital Schemes: Tax Relief Guide For Investors

When it comes to finding out what tax relief is available for investors using a venture...

View Our latest insights »
Get the latest UK tax & business news and guidance delivered straight to your inbox
We care about the protection of your data. No spam. Unsubscribe anytime.
Copyright © 2021 Key Business Consultants LLP. Reg: E&W OC389322
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram