Postby Ian McTernan CTA » Tue Feb 24, 2015 2:21 pm
So in order to avoid tax on the gain of £150,000 (around £42,000) you instead want to give it away to a charity?
Let's assume you receive 30% tax relief on your investment. so your net investment in the EIS is £105,000.
You then give 80% of this to the charity (£120,000), and save being taxed on 30,000 of the gain, saving £8,400 of tax. Your net investment is now £75,000, being the £150,000 you put in, less the IT relief, less the £30,000 you took back out over three years to utilise the CGT allowance (i've ignored the partial disposal rules and many others to keep this simple).
So to avoid a maximum of £42,000 of CGT you have placed all your profit in a risky investment vehicle that could in theory be worthless after 3 years and at best has cost you £75,000 in real hard cash.
If your purpose is solely to avoid the CGT on the sale, then you achieved it. But it cost you almost double the tax bill.