Deferring capital gains tax: legal strategies

When deferral makes sense and how to implement it.

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Deferring Capital Gains Tax

When might deferral make sense?

  • If you expect to be in a lower tax bracket in future years, deferring the realisation of capital gains until then could reduce your overall tax liability.
  • You want to make use of future annual exempt amounts to reduce taxable gains.
  • You want to keep the capital working
  • You want your heirs to inherit assets with a stepped-up basis, potentially reducing their capital gains tax liability when they sell the assets.
  • You're expecting losses elsewhere and want to offset gains against those losses in the future.

How to defer capital gains

The most popular way to defer capital gains tax is to reinvest the profit from the sale of assets into an EIS (Enterprise Investment Scheme)
These are high-risk investments in smaller companies that qualify for generous tax reliefs, including deferral of capital gains tax. Careful planning with a tax adviser may even be able to reduce the capital gains tax bill to zero.

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