The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
The enterprise investment scheme (EIS) encourages individuals to invest money in shares issued by qualifying unquoted companies with a permanent establishment in the UK.
A subscription for eligible shares of a qualifying EIS company is a tax efficient investment for the individual. He can benefit from the following tax reliefs:
This guidance note discusses the triggers which cause the capital gain deferred on the subscription for EIS shares to crystallise.
Under EIS deferral relief (also known as EIS re-investment relief), deferred gains are set aside or‘frozen’ until the occurrence of specified future events.
Note that EIS deferral relief does not work in the same way as roll-over relief because the base cost of the replacement asset, ie the new EIS shares, remains the same.
This frozen gain crystallises and becomes chargeable in the year of a ‘chargeable event’. Usually, this will be on the sale of the EIS shares. When the EIS shares are sold, there will sometimes be a gain on
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