EIS & CGT deferral

[JWDSUMNER]

Invested £30k in EIS scheme 5 yrs ago using it for Income Tax relief and CGT deferral. It is to be wound up in next 9 months. It is anticipated that a payout of 30p in the pound will be made ie £9000. As it traded for over over 3 years I belief there are no issues with Income Tax relief. My question is will I have to pay all, or part, of the CGT deferred ie £12000.

Any help would be appreciated.

John

[tax_schmax]

What was the deferred gain? You are liable to deal with the deferred gain in 9 months time, but the CGT allowance may take care of most of the gain for you. Deferral works very well by allowing you to spread a large gain over a number of years, using your annual allowance each year. You can also roll over the deferral if need be. You'd get further income tax relief if you did. If you'd rather deal with it soon, you might want to line up a few losses. They are not that hard to find presently!

[tax_schmax]

Just read your post again. It appears that the gain you deferred was 30K and the tax due would have been 12K assuming 40%. The allowance the gain recrystallises when the shares are disposed of. The whole gain is chargeable if all the shares are redeemed. If you redeem less than 100% of the shares, a proportion of the gain becomes chargeable. So £30,000 minus £10,600 allowance = £19,400 taxable. You may be able to use loss relief to reduce your CGT or income tax liability to take the sting out of the tax bill. You will also have deferred from 40% to 28%. Not all bad.

[JWDSUMNER]

Thanks for that.

As with all investments you have to be prepared for losses. (Generally I have ended on the plus side) Good news this one is not quiet as large as I thought it may be!


John