Q&A: Seed Enterprise Investment Scheme

Q. I recently made an investment of £100,000 under the Seed Enterprise Investment Scheme. However, as I don't have much income in the current tax year, I am going to make a carry back claim. I’ve read that there is a 50% CGT exemption available. Should I sell some of my listed share portfolio to take advantage of this?

A: Unlike the main EIS, the Seed EIS exemption can only be matched to gains made in the year that the shares are acquired or treated as acquired, i.e., the year the income tax relief will be effective. If you make a carry back claim you will only be able to match the investment to gains made in 2020/21, so selling shares to generate gains won't work. You'll need to compare the overall relief using a carry back claim against not doing so and triggering gains to utilise the exemption.

Further information about the Seed Enterprise Investment Scheme can be found here.

About the Author

Paul Newbold

Partner

After qualifying with KPMG where he gained significant audit experience, Paul joined Torgersens in 1991 and became the firm’s audit partner in 2000. Paul employs his broad range of financial skills to provide commercial and accounting advice to a range of owner-managed businesses in the independent retail, education and professional services sectors. He also has extensive experience dealing with charities, Registered Social Landlords and not-for-profit organisations and co-operatives.   Outside of work, Paul likes to visit Eastern France and South-West German and read novels by David Morrell, Michael Blake and Harper Lee. He also likes watching films, his favourite is The Shawshank Redemption.

To get in touch please e-mail paul.newbold@torgersens.com.