Entrepreneurs have been taking a bit of a battering this year, with three Budget measures being introduced to stop them from using the relief in a way in which it wasn’t intended by the likes of HMRC (announced during the first Budget of 2015 and at the previous Autumn Statement 2014). So it’s a welcome change to be able to write about some good news.
This is about a measure concerning the deferral of CGT, known as reinvestment relief. A person who has incurred a capital gain on another asset can defer his tax liability by subscribing for shares or securities under the various Enterprise Investment Schemes. For two of these schemes a gain that qualified for entrepreneurs’ relief couldn’t be deferred unless the investor gave up his claim to the 10% rate and paid the higher rates when the tax was eventually due.
This will no longer be the case – one can now defer the gain AND benefit from the 10% rate. In other words, you can have your cake and eat it.
But one needs to tread with caution, as the legislation contains a small trap…
(This article can be downloaded in pdf format at Academia.edu.)