VCM25080 - EIS: taper relief for serial investments: chargeable event other than a disposal: example: Taper relief does not apply to gains accruing or treated as accruing after 5 April 2008
On 5 September 2004, Alfred disposes of an oil painting at a gain of 拢250,000 which he had acquired on 12 August 1998. He invests 拢400,000 in shares in ABC Ltd on 14 December 2004, and obtains deferral relief by setting 拢250,000 of the expenditure on these shares against the gain on the painting. He disposes of all the shares in ABC Ltd on 3 January 2008 at a gain of 拢110,000, and they qualify as a business asset for taper relief purposes throughout the period for which he held them.
The deferred gain of 拢250,000 which is brought back into charge on 3 January 2008 when the shares in ABC Ltd are disposed of qualifies for 6 years鈥� taper relief as a non-business asset.
The gain of 拢110,000 on the ABC Ltd shares qualifies for 3 years鈥� business asset taper relief.
If Alfred defers these gains under the EIS by setting qualifying expenditure on shares in another company against them, the gain of 拢110,000 can benefit from cumulative taper relief but the gain of 拢250,000 cannot.