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HMRC internal manual

Venture Capital Schemes Manual

EIS: deferral relief: shares issued on or after 6 April 1998: introduction and qualifying gains


FA98/S74 and FA98/SCH13 introduced significant changes to the existing rules for CGT deferral relief within the EIS. The new rules apply where the shares are issued on or after 6 April 1998.

Qualifying gains

The relief can be claimed against any chargeable gain arising on the disposal of any asset by a taxpayer if a qualifying investment, see VCM23020, is acquired by them at a qualifying time, see VCM23030, on or after 6 April 1998. The chargeable gain is the gain after any mandatory deductions and reliefs which have to be claimed. However, the gain to be invested is that before the deduction of taper relief. Any taper relief is deducted when the gain comes back into charge following a chargeable event, see VCM23110. Taper relief does not apply to gains accruing or treated as accruing after 5 April 2008.

Deferral relief can be claimed when a gain previously deferred under the EIS (or under the VCT scheme in respect of shares issued on or before 5 April 2004, see VCM50000 onwards), is brought back into charge. Also, under the new rules, a gain accruing as a result of a claw back of reinvestment relief, see CG62200 onwards, could be the subject of a deferral relief claim. The investor may claim deferral relief on part of his or her gain.