- EIS deferral postpones CGT on any gain you reinvest in qualifying EIS shares.
- EIS shares must be issued 1 year before to 3 years after the disposal.
- The gain revives when you sell the shares or another chargeable event occurs.
EIS CGT deferral relief lets you postpone Capital Gains Tax on any gain by reinvesting it in qualifying EIS shares issued between one year before and three years after the disposal. Raising EIS money for your own company? Start with SEIS/EIS advance assurance.
This guide covers the rules, trigger events, worked examples and how to claim.
What is EIS CGT deferral relief?
EIS CGT deferral relief lets you defer Capital Gains Tax on a gain you’ve already made by reinvesting that gain into qualifying EIS shares. You postpone the CGT bill until a later chargeable event, rather than paying it for the tax year the gain arose.
The relief applies whether the original gain came from property, shares, crypto or other chargeable assets. As long as the gain is reinvested within the EIS time limits, you can defer the full amount, even if you’ve already used your annual CGT allowance.
EIS CGT deferral is separate from the standard 30% EIS income tax relief covered in our guide to EIS relief rates. You can claim both if you meet the conditions, but you don’t need income tax relief to claim deferral.
The deferred gain isn’t cancelled. It’s paused until a chargeable event, such as selling your EIS shares, the shares ceasing to qualify or you leaving the UK within three years. We explain each one below.
If you’re new to EIS, our investor scheme FAQs cover the basics on share classes and reliefs.
How does EIS CGT deferral relief work?
EIS CGT deferral relief works by letting you reinvest a capital gain into a qualifying EIS company within a set time window. When you do this, the CGT that would usually be due is postponed until a later event.
The investment window is flexible. Your EIS shares can be issued up to one year before the gain arises or up to three years after, and you can reinvest gains from several assets into one EIS investment.
Once the shares are issued, your gain is deferred. It stays deferred until a chargeable event happens, usually when you sell your EIS shares or the shares stop qualifying.
You don’t need to reinvest the entire disposal proceeds. To defer the full gain, you invest an amount at least equal to the gain, so you can keep the rest of the proceeds in cash.
What are the EIS CGT deferral time limits and key rules?
EIS CGT deferral relief depends on timing. The rules are straightforward once you break them down, and getting them right means your gain is fully deferred.
The EIS deferral window
You can defer a gain if your EIS shares are issued:
- Up to one year before the gain arises, as long as you still hold the shares when it does
- In the same tax year as the gain
- Up to three years after the gain arises
This four-year span gives you flexibility, especially if you’re waiting for the right EIS opportunity or managing several disposals. HMRC can extend these time limits in some circumstances.
Minimum conditions you must meet
To secure EIS CGT deferral relief, you need to meet these conditions:
- You’re a UK resident individual, and no double tax treaty treats you as resident elsewhere
- The shares are qualifying EIS shares when they’re issued to you
- The shares are new, subscribed for in cash and fully paid up
- You invest at least the gain you want to defer, not the total disposal proceeds
- You receive your EIS3 certificate before you claim
Unlike EIS income tax relief, deferral is available even if you’re connected with the company. That matters for founders reinvesting their own gains into a company they run.
If you’re unsure whether a company still qualifies, our guide on EIS time limits explains what HMRC expects from both investors and companies.
Quick reference table: EIS CGT deferral rules
| Rule | Summary |
|---|---|
| Eligible gains | Any chargeable gain, including property, shares, crypto and personal assets |
| Amount deferrable | Up to 100% of the gain, matched by the amount you invest |
| Investment window | Shares issued 1 year before to 3 years after the gain |
| Holding period | None for deferral itself; 3 years matters for income tax relief and the residence rule |
| Deferral duration | Until a chargeable event occurs |
| Max investment for deferral | No upper limit |
| Interaction with income tax relief | Both can be claimed on the same investment |
Why timing matters
The investment window decides whether your gain qualifies for EIS deferral relief. After that, the deferred gain comes back into charge whenever you dispose of the shares, whether that’s in year two or year ten.
The three-year mark still matters. Selling inside three years also claws back EIS income tax relief, and leaving the UK inside three years revives the gain, so keep track of these dates to avoid accidental clawbacks.
When do deferred gains become taxable?
A deferred gain isn’t cancelled. It becomes taxable again when a chargeable event happens, which can be years after the original investment, so keep track of your EIS shares and the company’s qualifying status.
Main events that trigger the deferred gain
Your deferred gain becomes taxable when:
- You sell or dispose of your EIS shares. Any disposal counts, including selling part of your holding. A transfer to a spouse or civil partner you live with doesn’t count until they dispose of the shares.
- The shares stop qualifying. This can happen if the company stops trading, breaches the scheme limits or fails other EIS conditions.
- You leave the UK within three years of the share issue. There’s an exception if you take a job abroad and return within three years without disposing of any shares.
- You gift the shares to anyone other than your spouse or civil partner. A gift counts as a disposal.
- The shares are redeemed or repaid. A redemption counts as a disposal of the shares.
Keep a simple timeline of when your EIS shares were issued and when the three-year period ends. A short reminder can help you avoid a disposal that brings the deferred gain back into charge unexpectedly.
What happens when a trigger event occurs
Once a chargeable event happens, HMRC treats the original gain as arising at that point. It’s taxed at the CGT rates in force then, currently 18% and 24%, not the rates that applied when you first made the disposal.
That means future rate changes can raise or lower the bill. It also means the timing of selling your EIS shares can affect the final tax you pay.
How this interacts with normal CGT rules
The revived gain is added to any other gains you make in that tax year. You can set that year’s annual exempt amount against it, which is £3,000 for 2026 to 2027.
If you’re planning a sale or a move abroad, map out when each deferred gain will revive before you act.
How does EIS CGT deferral compare with SEIS reinvestment relief?
EIS CGT deferral and SEIS reinvestment relief both help investors manage Capital Gains Tax, but they work in different ways. Understanding the difference helps you choose the right strategy for your goals.
Key differences at a glance
| Feature | EIS CGT deferral | SEIS reinvestment relief |
|---|---|---|
| Type of benefit | CGT deferred until a later event | CGT exempt on up to 50% of the gain |
| Max investment for this relief | No limit for deferral | Up to £200,000 a year, the SEIS income tax relief cap |
| Holding period | None for deferral; 3 years for income tax relief | 3 years, or the relief can be withdrawn |
| Time window | Shares issued 1 year before to 3 years after the gain | Gain and investment in the same tax year, unless carrying back |
| Income tax relief required | Not required to defer a gain | Must claim SEIS income tax relief |
| Best suited for | Larger gains and flexible planning | Smaller gains where an exemption saves more tax |
HMRC’s HS393 helpsheet confirms you can’t get SEIS reinvestment relief unless you also get SEIS income tax relief.
Which relief gives the bigger benefit?
- Large gains often benefit more from EIS deferral, because you can defer 100% with no upper limit.
- Smaller gains can benefit more from SEIS reinvestment relief, because half the matched gain is exempt for good rather than postponed.
Both reliefs can sit in the same long-term investment strategy. The right mix depends on the size of your gain, your income tax position and the type of companies you want to back.
How they work together in real life
Many investors use SEIS for early-stage, higher-risk opportunities and EIS for later rounds. This blend gives both a CGT exemption and CGT deferral, while spreading risk across different growth stages.
What does EIS CGT deferral look like in practice?
Examples make it much easier to see how EIS CGT deferral relief works. These scenarios show how gains are deferred, when tax becomes payable and how the timing rules apply.
Example 1: Deferring the full gain
You sell a rental property and realise a £60,000 gain. You reinvest the full £60,000 into EIS shares within the allowed window.
- Amount invested: £60,000
- CGT deferred: £60,000
- CGT rate avoided today: 24% (higher rate)
- Tax postponed: £14,400, not cancelled
The gain stays deferred until you sell the EIS shares or another chargeable event occurs.
Example 2: Deferring part of a gain
You sell listed shares and realise a £40,000 gain. You choose to invest only £25,000 into EIS shares.
- Amount invested: £25,000
- CGT deferred: £25,000
- Remaining gain taxable now: £15,000
Partial deferral is common if you want liquidity while still getting EIS benefits.
Example 3: Trigger event after the holding period
You realise a £100,000 gain in 2024 and reinvest it into EIS shares in 2025. You hold the shares for three years, then sell them in 2028.
- The deferred gain becomes taxable in 2028
- CGT applies at 2028 rates
- Any profit on the EIS shares themselves is CGT-free if you got EIS income tax relief and it wasn’t withdrawn
Deferral shifts the timing of the CGT rather than reducing the underlying gain.
Example 4: Losing EIS status
You invest £30,000 of gains into EIS shares. Two years later, the company stops meeting EIS requirements.
- Deferred gain: £30,000
- The gain becomes taxable immediately
- Tax applies at current CGT rates
Changes in company status are rare but possible, so it’s wise to monitor your investment.
If you’re juggling several gains in one year, use EIS for larger gains and keep your annual CGT allowance for smaller disposals. Our guide to tax relief in the UK shows other reliefs that can work alongside EIS.
How do you claim EIS CGT deferral relief?
Claiming EIS CGT deferral relief is straightforward once you have the right paperwork. The key document is your EIS3 certificate, which confirms that your investment qualifies.
Step 1: Get your EIS3 certificate
After you invest, the company sends HMRC a compliance statement. Once HMRC authorises it, the company sends you an EIS3 certificate.
You can’t claim income tax relief or CGT deferral relief until you have this certificate. Keep it safe, as HMRC may ask to see it.
Step 2: Decide which gain you’re deferring
Identify the specific gain, or gains, you want to defer. Make sure:
- The gain falls within the EIS deferral window
- You’ve invested an amount at least equal to the gain you want to defer
- You’re UK resident for the relevant periods
If you’re managing several gains at once, map them on a single timeline alongside your EIS subscriptions.
Step 3: Complete the claim form on your EIS3
Your EIS3 certificate comes with a claim form attached. For deferral, you’ll:
- Enter details of the asset you disposed of
- State the amount of gain to be deferred
- Confirm the date of the disposal
Our guide to claiming EIS relief covers the income tax side of the same certificate.
Step 4: Include the claim in your Self Assessment tax return
You claim EIS CGT deferral through your Self Assessment tax return. HMRC’s HS297 helpsheet says you should:
- Attach the completed EIS3 claim form to the Capital Gains Tax summary pages
- Put “OTH” in box 36 on page CG 2 if the gain arose in that return’s tax year, or “MUL” if you’re making more than one type of claim
- State clearly in box 54, or in your computation, that you’re claiming EIS deferral relief
Step 5: Check the claim deadline
The latest date to claim is five years after the first 31 January following the end of the tax year in which the shares were issued. For shares issued in August 2024, that’s 31 January 2031.
Missing this window can mean losing the relief, so note the deadline as soon as your EIS3 arrives.
Step 6: Keep clear records
Keep a simple record of:
- The asset you sold
- Date of disposal
- Gain deferred
- Date your EIS shares were issued
- Any later chargeable events
Good records make it easier to complete future returns when the deferred gain eventually becomes chargeable.
If this feels like a lot to juggle on top of running a business, you don’t have to handle it alone. A dedicated tax accountant can manage your EIS claims, track deadlines and report your CGT deferral correctly.
Want an accountant to handle this?
Raising EIS money for your own company? Start with advance assurance, which gives investors HMRC’s view that your shares should qualify before they commit and plan their deferral around your round.
If your round is small and your cap table is simple, you can apply yourself through GOV.UK. If you’d rather hand it over, Sleek’s accountants prepare your application, then handle the compliance statement and EIS3 paperwork through our advance assurance service.
Pre-revenue companies can add a startup accountant to keep the books investor-ready. Once you’re trading, a limited company accountant handles your year-end and corporation tax alongside your EIS compliance.
How Sleek helps with EIS CGT deferral relief
EIS CGT deferral relief only works if the window, the EIS3 claim and any later chargeable event are tracked for years after you invest. Sleek’s AI handles the admin and a qualified accountant checks every figure before your Self Assessment is filed, so deferred and revived gains are reported correctly. Founders raising the round get the same accountant through our EIS advance assurance support.
Get EIS CGT deferral handled by a dedicated Sleek accountant
FAQs on eis cgt deferral relief
Can my accountant do this for me?
Yes. An accountant can check your gain falls inside the deferral window, complete the claim form on your EIS3 and attach it to your Self Assessment return. If you’re the founder raising the money, Sleek’s accountants also prepare your advance assurance application and compliance statement through our SEIS and EIS application support.
Do I need to report the deferred gain every year?
No. You report the original disposal and your deferral claim for the tax year the gain arose, then report the revived gain on page CG 2 of the Capital Gains Tax summary in the year a chargeable event happens. If you’re filing for the first time, our guide on how to file a Self Assessment tax return can help you prepare.
Do I still pay the deferred gain if my EIS shares lose value?
Yes. If you sell all your EIS shares, the whole deferred gain is revived, even if you sell at a loss. You can set the loss on the EIS shares, after reducing their cost by any income tax relief you kept, against your other gains or your income, which often softens the bill.
What happens to a deferred gain if I die?
The deferred gain falls away. HMRC only revives a deferred gain on a chargeable event during your lifetime, so if you die before one happens, the postponed CGT is never charged. Inheritance Tax on the shares is a separate question for your estate.
Can I defer a gain that was already deferred?
Yes. If a gain you deferred under EIS is revived, for example when you sell your EIS shares, you can defer it again by subscribing for new qualifying EIS shares within the usual window. The same applies to gains revived from earlier Venture Capital Trust deferral claims.
