Newsletter Autumn 2015

Claim your tax relief!

There are some very generous exemptions from Capital Gains Tax (CGT) if you invest in small companies using either Enterprise Investment Scheme (EIS) Seed Enterprise Investment Scheme (SEIS) or Social Investment Tax Relief (SITR). If you hold the shares for at least three years any gain you make on disposal should be free of CGT.

However, that exemption doesn't apply automatically. Income tax relief must first be claimed for the investments made under EIS, SEIS and SITR.

The CGT exemption on disposal of the shares is only given if the income tax relief has been claimed and not withdrawn. If you are not bothered about the income tax relief – perhaps you have little taxable income in the year in which the investment was made – you still need to claim it or your CGT relief will be lost.

The deadline for making a claim for income tax relief on an enterprise investment scheme is five years from the tax return filing date for the year in which the investment was made. So for investments made in 2009/10 the period to make a claim will run out on 31 January 2016.

In a recent case HMRC refused to accept a late claim for EIS income tax relief, to unlock the CGT relief, and the Tax Tribunal said they couldn't force HMRC to accept a late claim.