CGT deferral relief and EIS

Minky123lala

Hi,
Appreciate any thoughts. In a scenario of :

A BTL property was sold realising a £62k gain, (£56k after the £6k allowance reduction) and giving a CGT bill of £15,680 (@28% as a HRTP).

I invested £20k in an EIS in the qualifying period and so could defer 35.7% or £5600 of the gain (as £20k/£56k is 37.5% and 37.5% of £15,680 is £5,600) .

So I pay CGT of £10,080 (£15,680 - £5,600) within the 60 days post property sale and defer £5,600 until the EIS shares are sold or I die

4         questions –

1.       have I worked this out correctly ?

2.       Regarding the £5,600 CGT deferred - can I reduce it down in the following tax year by utilising the £3000 annual CGT allowance even if I don’t sell the EIS shares or buy further EIS shares and then reduce down the balance using the allowance in future years in the same fashion until it’s wiped out, or is that not possible ?

3.       If the EIS shares were sold in let’s say the second year, could I use that year’s CGT allowance to reduce the amount to pay so £5,600 less £3,000 = £1,400 left to pay?

4.       If I already paid the whole £15,680 within the 60 days of the property sale and the following tax year the CGT rate looked more favourable, could I get a GCT refund and defer in hindsight if I haven’t sold the EIS shares?

First time of doing EIS and CGT, so new to all this.

Thanks

mostwelcome

Minky123lala said:

so could defer 35.7% or £5600 of the gain (as £20k/£56k is 37.5% and 37.5% of £15,680 is £5,600)

I believe you can defer all 20k of your gain

https://www.wealthclub.co.uk/eis-tax-relief/#capital-gains-deferral (simple)

https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm23080 (more gory detail)

Minky123lala

Thanks Mostwelcome - appreciate you taking the time. I had seen the HMRC page before but didn't find it very helpful - would have liked much more gory detail