C5: CGT claims

EIS

 

Persons with no taxable income

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The CGT legislation requires the persons income tax liability to have been reduced by the EIS claim. Where a person has no taxable income, they cannot satisfy this condition:

 

“It is true that Parliament amended TCGA s 150A with the object of allowing investors to obtain the full CGT exemption even where their low income tax liability prevented them making full use of the EIS income tax relief. But when Parliament made this change, it did not detach the CGT exemption from the EIS income tax relief (although it could have solved the problem in that way) but rather retained the same mechanism: there has to be a claim, and the individual’s income tax must be reduced as a result.” (Ames v. HMRC [2015] UKFTT 337 (TC), §64).

 

Although it may be possible to reject the personal allowance if there is some small income for the year (Ames, §89).