Twelve Facts On Carry-Back: All You Need To Successfully Get Invested In An EIS In 2019/20 – December 2019

It is becoming that time of year - and I am not talking about the required office Christmas parties and dutiful time with the family. Between Christmas and New Year, we all try to do a bit of life admin. For many, this is when they realise they have capital gains they want to get tax relief on for this 2019/20 tax year, or even for 2018/19. For those with a Capital Gains Tax ("CGT") bill from last year (2018/19), Enterprise Investment Schemes ("EIS") offer an ability to get relief via a Carry-Back facility. But not every EIS in the market can ensure you benefit from this relief.

I get asked about this many times throughout the year: which managers can ensure I get Carry-Back for myself or my client? It is hard to ascertain which managers and funds offer this service (and the information is not always up to date). Now our subscribers need fret no longer: we have published our Market Insight report on the Carry-Back Facility for EIS. Moreover, we have added the ability to filter by those offering this service on our open offer page. Register here to see our subscription and upgrade options!

Following many discussions with advisers and investors, there are a number of knowledge gaps and misconceptions, with regards to EIS Carry-Back options, so here are the 12 things you need to know when thinking about using Carry-back.

What exactly is Carry-Back? One of the EIS benefits is that they offer the ability for investors to get EIS relief on their capital gains liability, not just in the tax-year in which they invest, but also in relation to offsetting any taxable gains from the previous year (in order to ease their overall tax burden). For example, if you invest £100,000 in an EIS which is invested before the close of this tax year, April 5th 2020, you can get 30% income tax relief and 100% capital gains deferral any gains generated in either or both 2019/20 and 2018/19 tax years.

The Golden Rule: quality of EIS first, Carry-back second We fully appreciate that many investors are using EIS for tax relief purposes and therefore their major consideration is whether a manager offers Carry-back or not, but not all that offer Carry-Back are created equal. Don't let tax planning alone rule where you make your investments -focus on the investment decision and the quality of the offering. Carry-Back isn't enough, alone: you need to make sure you are going to get a good return for the risk taken. Ensure you still do your due diligence and research into...