Commentary

C3.1310 Business asset disposal relief—interaction with EIS, VCTs, SITR, holdover relief and rollover relief

Capital gains tax
Capital gains tax | Commentary

C3.1310 Business asset disposal relief—interaction with EIS, VCTs, SITR, holdover relief and rollover relief

Capital gains tax | Commentary

C3.1310 Business asset disposal relief—interaction with EIS, VCTs, SITR, holdover relief and rollover relief

Deferred gains

It is possible to defer a charge to CGT on the disposal of an asset where the proceeds are reinvested in shares subscribed for under the Enterprise Investment Scheme (EIS, see Division E3.1) or in assets under Social Investment Tax Relief (SITR, see C3.1912). Whilst EIS was introduced in 1994, SITR only applies for investments made on or after 6 April 2014. The interaction of these reliefs with business asset disposal relief (previously known as entrepreneurs' relief) is as follows.

Original disposal on or after 3 December 2014

Gains realised on or after 3 December 20141 which are eligible for business asset disposal relief, but which are instead deferred into investments which qualify for EIS or SITR, remain eligible for business asset disposal relief when the deferred gain becomes chargeable2.

The relief applies if the following conditions are met3:

  1.  

    •     A chargeable gain accrues as a result of a chargeable event occurring under EIS or SITR4.

  2.  

    •     The disposal which originally gave rise to that gain, ie the disposal for which the gain was deferred, was a relevant business disposal, or where a gain has been deferred more than once, for instance by reinvestment in more than one holding of EIS shares or social investment, the underlying disposal associated with the first deferral was a relevant business disposal5. This is to be determined according to the law applying at the time the original disposal or underlying disposal

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