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HMRC internal manual

Venture Capital Schemes Manual

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EIS: deferral relief: shares issued on or after 6 April 1998: when is the deferred gain brought back into charge?

TCGA92/SCH5B/PARA3

The deferred gain, or part of the deferred gain, will be brought back into charge when there is a chargeable event. The events are:

  1. a disposal, including a deemed disposal, of the EIS eligible shares by the investor except a disposal to a spouse or civil partner which is covered by the no gain/no loss rule in TCGA92/S58, see CG22200 onwards;
  2. a disposal of the EIS eligible shares by a person who acquired them on a no gain/no loss transfer from their spouse or civil partner, the original investor. This does not apply to a no gain/no loss disposal back to the same spouse or civil partner;
  3. the investor becoming non-resident within the period beginning with the issue of the shares and ending immediately before the termination date, see VCM23070, relating to those shares, but see exceptions at VCM23120;
  4. the person who received the shares on a no gain/no loss transfer from their spouse or civil partner becoming non-resident within the period beginning with the issue of the shares and ending immediately before the termination date, see VCM23070, relating to those shares, but see exceptions at VCM23120;
  5. the shares ceasing, or being treated as ceasing, to be eligible shares, see VCM23060 onwards.

For shares issued before 6 April 2000 but only in the circumstances where no claim to deferral relief or income tax relief has been made on those shares before 7 March 2001, the period referred to in (c) and (d) above is replaced by a period of five years from the date of issue of the shares.

If a claim to either income tax or deferral relief has been made before 7 March 2001 then the period described in (c) and (d) above applies.