VCM23520 - EIS: deferral relief: shares issued on or after 6 April 1998: trustees: basis of restriction

The flow chart below summarises how to calculate the proportion of the chargeable gain arising to trustees which is eligible for deferral relief.

The flow chart describes the consequences of the legislation. The process followed by the legislation is complex. Where at least one individual has an interest in possession, all the other interests in the settlement are treated as another interest in possession. If any of the beneficiaries without an interest in possession, whether entitled to capital or income, is not an individual, then that deemed interest in possession is treated as held by a non-individual, otherwise it is treated as held by an individual.

Where there is an actual interest in possession at both the disposal date and the acquisition date, you look at the percentage of the income to which individual holders of interests in possession are entitled, including the deemed interest in possession. Provided the percentage is higher at the acquisition date, relief is due on the percentage share at the disposal date.

If there is an actual interest in possession at the acquisition date and none at the disposal date, or vice-versa, no relief is due.

Examples are at VCM23530.

Flow chart

Trust as beneficiary

If an interest in a trust is held by a second trust you should look through to the beneficiaries of the second trust in order to determine the portion of the chargeable gains eligible for deferral relief.