The new rules on deferral of capital gains on investments in VCTs and EISs mean the latter will be the better tool for those looking to defer tax liabilities, according to analysis of the Budget by Downing Corporate Finance.
The firm says in a follow-up note to Wednesday’s action that CGT deferral relief will not be available for VCT shares issued on or after 6 April.
"Capital gains arising in the 2004/5 tax year can be deferred if a subscription for VCT shares takes place in the 12 months prior to the gain arising and within the 2003/4 tax year. Therefore, if you are likely to realise a capital gain in the next 12 months, you only have until 5th April 2004 to use a VCT for deferring this future liability."
EIS investors, no the other hand, will be able to continue deferring unlimited amounts of CGT remains even after the next fiscal year starts.
This makes EISs the better product for those with CGT liabilities to defer.IFAonline
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