Taxation of Chargeable Gains Act 1992 Schedule 5B paragraph 4

Gain accruing on chargeable event

Section 4 of Schedule 5B sets out how a deferred gain under EIS deferral relief is brought back into charge when a chargeable event occurs, and establishes the identification rules for determining which shares are treated as disposed of first.

• When a chargeable event occurs in respect of shares that have not already been subject to a previous chargeable event, a chargeable gain equal to the proportion of the deferred gain attributable to those shares is treated as accruing at that time.
• Where shares of the same class were acquired on different days, disposals are matched against earlier acquisitions before later ones; where shares were acquired on the same day, they are disposed of in a specified order depending on whether they carry deferral relief, EIS income tax relief, both, or neither.
• Shares received by a spouse or civil partner on a no-gain/no-loss transfer are treated for identification purposes as having been acquired on the date they were originally issued, and the normal share pooling rules do not apply to shares carrying only deferral relief.
• The deferred gain is the original gain against which EIS reinvestment relief was claimed, reduced by any amounts already brought back into charge through previous chargeable events relating to the same shares.