ACCA Advanced Taxation (ATX) Practice Exam

What is the timeframe for EIS reinvestment relief?

1. Between 6 months before and 12 months after the date of disposal

2. Between 12 months before and 36 months after the date of disposal

3. In the same tax year as the disposal

4. At any time within a 5-year period

The correct answer is: Between 12 months before and 36 months after the date of disposal

The timeframe for Enterprise Investment Scheme (EIS) reinvestment relief allows individuals to receive relief by reinvesting their gains into qualifying EIS shares. This relief can be claimed on gains arising from the disposal of assets. The specific timeframes for EIS reinvestment relief are critical for taxpayers seeking to maximize their tax efficiency. The correct timeframe is indeed between 12 months before the disposal of the original asset and up to 36 months after the date of disposal. This means that if an individual sells an asset and realizes a gain, they can reinvest that gain into EIS shares within this 48-month window and claim the associated tax relief on that gain. This provides flexibility for investors, as they have a significant period before and after the gain is realized to make their investment decisions. The option that states this timeframe accurately reflects the provisions outlined in tax legislation related to EIS and ensures that investors can fully utilize the benefits of reinvesting gains. Understanding this crucial timeline can help individuals planning their investments to take full advantage of the relief available under the EIS scheme.