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Carry back capital gains with EIS

Tax Briefs managing director Danby Bloch told PIMS delegates that investors can make substantial capital gains tax savings by using the Enterprise Investment Scheme carryback facility.

Bloch, who is also chairman of Helm Godfrey, said some clients should look at using the EIS for capital gains tax planning.

He said. “People who subscribe to EIS shares since April 6 this year can carry back their investment to defer a capital gain that was made years ago. Before this date, you would have been in the old tax regime where capital gains tax would have been chargeable at anything up to 40 per cent. Not all were chargeable at this rate so you need to pick your year carefully, as in some cases it would not be worth deferring. You defer the CGT until you dispose of the EIS shares and they will be chargeable at a maximum of 18 per cent.

“The downside is that by investing in EIS shares you have limited choice and they are relatively high risk because they are small businesses and are not listed.”

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