EIS Tax-free Capital Gains

Any capital gains made on the disposal of EIS-qualifying shares (where EIS income tax relief has been given and not withdrawn) are tax-free, provided that the EIS-qualifying shares have been held for three years. Where EIS income tax relief is withdrawn, or the shares are disposed of within the three years, then any capital gains arising will be chargeable gains and will be subject to capital gains tax in the normal way.

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Example of capital gains tax relief

Mr Blogs invests £100,000 in EIS qualifying companies through the MMC EIS Fund and receives his 30% income tax relief. After holding the shares in the companies for three years, the Fund starts selling its portfolio Investee Companies. Any gains that are made are tax-free and Mr Blogs may not need to declare these gains on his tax return.

 

Other tax reliefs available under the Enterprise Investment Scheme:

Income Tax relief

Capital Gains Tax deferral

Inheritance Tax relief

Loss relief

 

Disclaimer

You should note that the favourable tax treatment outlined above may not continue in the future and that other taxes or costs may arise which are not paid through MMC or imposed by MMC. The information in this document has been drafted on the basis that each Investor is an additional rate taxpayer, the additional rate being and 45% for 2016/17. If you are in any doubt about your tax arrangements, you should contact a qualified tax adviser for appropriate tax advice.

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