CGT DEFERRAL RELIEF (in detail)
Where an individual has a chargeable capital gain which arises within the period of three years before or one year after a subsciption has been been made in an EIS company, a claim may be made to defer the assessment of that chargeable gain, or any part of it. The amount of the gains that may be deferred is subject to no maximum and is limited only by the amount subscribed for in the EIS Company. Gains may be deferred until the shares are disposed of or, if earlier, until certain other events occur. Once the shares in the EIS Company have been sold, the deferred gain will fall back into charge to Capital Gains Tax in the year of disposal.
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Example - assuming income tax relief is also claimed
If income tax was obtained at 20%, the total income tax saved will be £40,000 being £30,000 tax free gain plus £10,000 income tax relief. Also the gain deferred was chargeable @ 40% in 2007/08 but falls in @ 18% in 2022/12, saving £11,000.
Example - assuming deferral relief only is claimed
Tax saved by claiming deferral relief £220,000 being £400,000 less £180,000.
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