Going back in time...
A little known and for that reason hugely underused benefit of an EIS is that you can not only defer a gain that has already occurred, up to three years in the past and claim back the tax already paid but you can also use an EIS investment to defer a gain that is yet to happen.
A client has up to twelve months from the date of investment into an EIS to make a capital gain and defer the gain with the EIS already invested.
An EIS which is maturing with a deferred capital gain which will become payable again as it becomes crystallised upon encashment or maturity but the proceeds of the EIS won’t be paid to the client in to invest in this tax year to benefit from the limited opportunity we have left. An opportunity for client’s who have spare cash elsewhere is to invest new money into an EIS now, claim their income tax relief back as usual, but then, when their EIS matures in the next 12 months re-defer the capital gain which has now become crystallised. They wouldn’t need to then invest the matured EIS unless specifically wanted to do so and thus it can be kept as cash or places in other investments to grow and avoid inflation eroding the value.
If a choice was a ‘long-hold’ EIS Companies such as that offered by our friends at Blackfinch Investments the client could potentially benefit at the end of the period NOT crystallising their gain and leaving it until death for the CGT to be eliminated or encash each year, utilising and off-setting their annual CGT allowances including their spouses where that applies.
Sharron A Higgins Ba (Hons) CeCM Cert CII Cert BB&C