This document summarizes various tax efficient investment schemes in the UK, including Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), Venture Capital Trusts (VCT), and pension contributions. It provides details on the tax reliefs and benefits available for each scheme, such as reduced capital gains tax, reduced income tax liability in the year of investment, and exemptions from capital gains tax on disposal of investments. Examples are also given to illustrate how the tax reliefs are calculated for different investment amounts and scenarios.

1. TAX REDUCERS TAX EFFICIENT INVESTMENTS
Advance Taxation
Finance Act 2021122
Tutor : Owais Mirchawala
TAX REDUCERS

2. Tax Reducers 2
, Income tax
relief
:
In the
year of
investment tax
liability Enterprise investment scheme
-
These are the investments which attract tax
reliefs
.
will reduce
by lower
of
: -
Els is a scheme under which
Qualifying
co.
1,
Pension contribution ✓ 1,
Tax
Liability issues its shares to
Qualifying
investor .
If a
2 ,
Seed
Enterprise Investment scheme ✓
2,50%
of
SEK investment.
qualifying
investor invest in those shares then
3, Enterprise Investment scheme -
This
relief
can
get
carried back
up
-
till 9-
year
.
tax
relief
will be available .
4, venture capital Trust.
-
company which is
Qualifying to launch Els must
Seed Enterprise Investment scheme CSEKD -
SEIS shares should be owned
for at-
least
years.
satisfy following
conditions :
-
SEIS is a tax
efficient
investment scheme under IF SEB shares are sold
before 3years: ✓ 1
,
co . should be UK resident
which a
Qualifying
co. issues its shares .
If a 1, Income tax
relief will
get
withdrawn at lower
of
✓ 2) Co. should have less than 250
employees
Qualifying investor purchases shares under SEIS then a
,
Original relief
✓ 3 co should be unlisted
a tax
relief
is allowed.
b) DP ✗
Effective rate
of relief
✓ 4 , co .
should have assets less than £15m
-
Company which is
Qualifying to launch SEIS must 2 , capital gain exempted on investment in SEK
before issue
of
shares under scheme
satisfy following
conditions : will
get chargeable
and assets less than £16m
after
launch
1
,
co . should be UK resident 3)
Capital
gain
on Sale
of
SEK shares will also of scheme shares
2) Co. should have less than 25
employees get chargeable ✓
5, co.
should not be in
financial difficulty
3) Co.
should be unlisted 4, If loss on sale
of
SEK shares then ✓ 6) Co . can raise maximum £5m under
4 , co .
should have assets less than €200.000 that capital loss will be
adjustable in Els
by issuing shares .
=
before issue
of
shares under scheme CGT return OE in income tax return .
Income -
Qualifying Investor is one who
satisfies following
5) co should not be in
financial difficulty tax
relief already given
will be deducted conditions
6) Co . can raise maximum £150.000 under
from capital loss . ✓ 1,
Owns less than 30% shares in co.
SE's
by issuing shares .
-
IF SEIS shares are sold
after
3.
years
.
2
,
Maximum investment in one Els is
III.
-
Qualifying Investor is one who
satisfies following
1 ,
No withdraw /
of
income tax
relief
-
Tax
Relief
conditions 2) No withdraw
of exempted gain relief when an investor makes investment in Els ,
he
gets
-
1,
Owns less than 301 shares in co.
3
, Gain on sale
of
SEIS shares becomes -1¥ tax
reliefs
:
2
,
Maximum investment in one SEIS is £100.000 .
exempt. 1
,
CGT reinvestment
relief
: IF proceeds of disposal
-
Tax
Relief
4) IF loss on sale
of
SEK shares then
of any
asset are invested in Els then
when an investor makes investment in SEK ,
he
gets
that capital loss will be
adjustable in
lower
of
will
get deferred:
-1¥ tax
reliefs
:
CGT return 0¥ in income tax return .
Income (a) 100%
of gain
on disposal
g
that asset
1
,
CGT reinvestment
relief
: If proceeds of disposal tax
relief already given
will be deducted (b) 1001.
of
investment in EIS
of any
asset are invested in SEIS then
from capital loss .
2
, Income tax
relief
:
In the
year of
investment tax
liability
lower
of
will
get exemept :
will reduce
by lower
of
:
(a) 501
of gain
on disposal that asset 1,
Tax
Liability
(b) 501
of
investment in SEIS.
2 , III.
of
Els investment.
-
This
relief
can
get
carried back
up
-
till 9-
year
.
-
Rules
of disposal 4
holding period are same in
SEIS E EIS .

3. Venture capital Trust
-
It is a listed co.
which raises
funds from
public and then invest those
funds
in EKG
SEIS
qualifying co.
- Uci has to invest at-
least 851
of
its
funds in
=
EK E SEIS
qualifying
co .
-
Investment in Uci is as
compared to EIS
Es SEIS as
1
,
it is a listed
company
2)
Pooling of funds happen on investment in vet
3) Risk
gets spread as VCT invest in
many Elser
sits
together.
4,
vet is
managed by experts.
-
No CGT reinvestment
relief
is available on investment
'
MM VCT
-
Income tax
relief
on Vci investment
,
reduces tax
liability by lower
of
:
↳ Tax
Liability
2>30^1.
✗ Investment.
-
UCT income tax
relief cannot be carried back.
-
Maximum investment limit in UCT is £200,000/investor
per
year
.
-
Minimum ownership period of
VCT shares is
s-yea-rs.IE sold
before
it then income tax
relief
will
get
withdrawn
,
at lower
of
:
b
Original Relief
2, DP ✗
Effective rate
of relief
.
-
NO CGT ¥
NO-gd.in/nol--ss
on Vci shares
irrespective of
sold within
5g
ears 0=12
after 5g
ears.
-
Dividend income on Vci shares is
exempt from
income tax.

4. - - -
-
-0--0 - ② -
-0--0--0
IF invested in Pension If invested in sets
1
,
HMRC contribution . 17.000 ✗ 100% : 21,250
✓
NIS
> As income exceeds 100.000
80% ( 17.000
) Income 127000 ei. PA will be reviewed.
HMRC cont.
4250
-
PA ( -
) -
Income =
127.000
2>
Basic rate band extends
by gross
amount.
Taxable 127.000 -
gross
QD ( -
)
I 37,700+21.250 = 58,950
✓
-9¥ -
gross
PPC ( -
)
3, ANI reduces
by gross
amount
of 2-1,2-50 .
-
37,700 ✗ 201 = 7540 ANI 127.000
Tax Return
89.300 ✗ 40% =
35,720 limit 400,000)
NI > As income exceeds 100.000 127.000 43,260 Excess 27,000
Income 135.000 é .
PA will be reviewed.
SEIS
relief
: lower
of
(55¥ PA =
12,570
PA (5-695) -
Income 135,000 1
, Tax : 43,260 37,760 27.000 ✗ 1 (13.5¥
Taxable 129.305 -
gross
QD ( -
) 2) 11,000×501=5505 2 -
TIX
-
gross
PPC (2-1,250)
Nls : 129,305 58.950×201=11,790 ANI 113.750 IF invested in Pension
70,355×401=28,142 limit 400¥ -
gross
Contribution = 11.000 ✗ 1001--13,75%0
129,305 39,932 Excess 13,750 801
.
-
Tax
paid : 39,932 PA = 12.570 Nls
-
HMRC Pension Cont.
¢250) 13,750 ✗ I (68^5) Income 127.000 > As income exceeds 100.000
35,682 2 5695 PA (5945) : PA will be reviewed .
Taxable 121,055
/
-
Income =
127.000
IF invested in sets Tax -
gross QD ( -
)
= ①
Tax Return > As income exceeds 100.000 • : =
37,7001-13-1-750=51,450×201--10,290 -
gross
PPC £3,750) ①
Nls PA will be reviewed. 69.605×40%27842 ANI 113,250
Income 135.000 -
Income = 135,000 121,055 38.132 limit (10%000)
PA ( O
) -
gross
① ☐ ( -
) Excess 13.250 -
Taxable 135.000 -
gross
PPC ( -
) -
Tax Paid =
38,132 PA = 12,570
III ANI 135.000 -
HMRC cont.
③ (2-150) 13,250 ✗ I ¥5
Nls: 135,000 37,700×201 : 7540 limit (1000¥ 13,750×201.
35,382 2 5945
97300×401: 38.920 Excess 35.000
135.000 46,460 -
PA = 12,570
SEIS
relief
: lower
of
(85-00) 35.000×1 (17,5-00)
↳ Tax : 46,460
✓
37960 2 0
2
,
17,000×50-1. : 8500

5. -
= - -
-
- -
-
-
-
- -
-
- -
- = -
-
-
€-0 -0--0 - -4--0
18119 19/20 20/21 21122 18119 19120 20121 21/22
Income 60,000 29,000 76,000 57,000 Incomes 18,000 24,000 56.000 34,000
PA (12,570) (12,570
) (12,570
) (12,570
) PA (12,570
) (12,570
) (12,570
) (12,5703
Taxable 47,430 16.430 63,430 44.430 Taxable 5430 111430 43,430 21,430
Tax Tax Tax Tax Tax
T¥ =
✓
= - - = TI
-
37,700×201: 7540 -
16,430×20-1=3286 -
37,7001120%: 7540 -37,700×201=7540-5430×201.
= 1086° -11,430 ✗ 201=2286
" 1¥
-
37,700×201=7540 -
21,430×201=4286
9730 ✗ 40% : 3892 SEIS
Relief
(3286) -
25,730×401=10,292 6730×401=2692 SEIS
relief
(108$ SEIS
relief
(22-86) 5730 ✗ 401=2292 SEIS withdraw -_ 2360
47,430 11,432
-
-
63,430 44,430 10.232 - -
43,430 9832 6646
5£15
relief
110,214) SEIS withdraw 9000
13,500-3286 1218 19,232
-
Mr. J invested 40,000 in sets in 19120 .
Income tax
relief
will be
log
: I,
40.000 ✗ 501=20.000
-
Mr. A invested 27.000 in sets in
191=20 . His income tax 2 ,
Tax
liability__ 22861-1086 = "3⑤2✓
relief
will be lower
of
1,
Tax
liability = 3286+11,432--14,718 -
SEK shares were
disposed in 21122
,
which is within
3years of
investment
2) 27-000×501=13,500 ✓ made in 19120 .
Income tax
relief
will be withdrawn at
1owe#-
-
SEIS shares were
disposed in 21122,
which is within 3.
years of
investment 1)
Original relief
= 3372
-
made in 19120 . Income tax
relief
will be withdrawn at lower
0g
: 2
, 28,000 ✗ 8.4-1. =23
-
1
,
Original relief
: 13,500 > 3372 ✗ 100--8.41
2 , 18,000 ✗
€56
. = 9000
✓
40.000
> 13,500 ✗ 100 : 50% -
CGT
implication on sale
of
SEIS shares :
27,000 Dp = 28,000
-
CGT
impact on sale
of
Seis shares : cost =
(40<000
)
DP = 18,000 loss (12,000
)
cost = (2%000) 5£15
relief already 1012 > 3372-2360
Original
capital loss (9000) relief -
withdraw'
given (10,988)
SEK
Relief already given
41500 > 13,500 -9000 S This loss can be
14500
) relieved in CGT return
>
This loss
relief
can be
0¥ in income tax return.
Claimed in income tax return
0£ in CGT return.

6. -
-0--0 = -5--0 -
- -
- -
_
_
_
_---
-
-
=
-
2019120 2021122 2019120 2021122
•
- Income 38.000 27.000 -
Income 52,000 37,000
_⑥ - PA (12,570
) (12,57-0) -
PA (12.570) (12,57-0)
98/19 19/20 20121 21122 Taxable 25,430 14,430 Taxable 39.430 24,430
Income 18,000 30,000 60,000 65.000 Tax Ta± Ta± Tax
= -
PA (12,5-70) (12,5-70) (12,570
) (12,570
) -
25,430×20-1. = 5086 -
14.430×201=2886-37,700×20-1. = 7540
-
24,430×201=4886
Taxable 5430 17430 47430 52,430 VCT
Relief (5-086) UCT
Relief
withdraw 1565 1730 ✗ 40-1- =
692 VCT
Relief
withdraw 1556
TEX 1-9-1 Tax 0 4451 39.430 2432 6442
-
=
-
5430 ✗ 20% : 1086 -
17,430×201=3486-37.700×20%7540 -37,700×201=7540 VCT
relief
(243-2)
£1s
Relief
(1086
) EIS
Relief
(34863 9730 ✗ 40%389214,730×401 : 5892 -
-
-
47,430 11,432 52.430 13,432
C-15 withdraw 4572 -
Mr .
✗ invested 39,000 in UCT in 2019120 .
180,04 Income tax
relief
will be lower
of
-
Mr. ✗ invested 25.000 in vet in 2019120 .
I
,
Tax
liability
: 5086
✓
=
Income tax
relief
will be
towery
-
Mr. K invested 17,000 in EIS in 19120 .
Income tax
relief
will be
lowery 2) 39.000 ✗ 301=11,700 1,
Tax
liability = 2432 ✓
1,
17,000 ✗ 30% : 5100 -
UCT shares were
disposed in 2021122,
which 2
,
25,000×301=7500
2 ,
Tax
liability= 34861-1086=4572✓ is within 5-
years of
investment made in -
UCT shares were
disposed in 2021122
,
-
EIS shares were
disposed in
21122,
which is within
3years of
investment 2019120. Income tax
relief
will be which is within b-
years of
investment
made in 19120 . Income tax
relief
will be withdrawn at
lowery
: withdrawn at lower
of
made in 2019120 . Income tax
relief
1
,
Original relief
: 4572
✓
↳ Original relief
: 5086 will be withdrawn at
towery :
2 ,
40.000 ✗ 26.8% = 10,757 2 , 12,000 ✗
13--1=1565
✓
I >
Original relief
= 2432
> 4572 ✗ 100=26.81
.
↳ 5086 ✗ 100=131.
2,
16.000 ✗ 9--7-1=1556 ✓
17,000 39.000 ↳ 2432×100=9.71
-
CGT impact on sale
of
shares 25.000
DP 440.000
Cost (1%000)
gain
23.000 > As Els shares are
being
sold
within
3years
•
:
gain
will be
chargeable
.

7. Practice Question No. 46:
Mr. A has following income:
18/19 - $60,000
19/20 - $29,000
20/21 - $76,000
21/22 - $57,000
He invested 27,000 in SEIS in 19/20 and disposed it for 18,000 in 21/22. Tax?
Practice Question No. 47:
Mr. J has following income:
18/19- $18,000
19/20- $24,000
20/21- $56,000
21/22- $34,000
He invested 40,000 in SEIS in 19/20 and disposed it for 28,000 in 21/22. Tax?
Practice Question No. 48:
Mr. K has following income:
18/19 - $18,000
19/20 - $30,000
20/21 - $60,000
21/22 - $65,000
He invested 17,000 in EIS in 19/20 and disposed it for 40,000 in 21/22. Tax?
Practice Question No. 49:
Mr. X invested 39,000 in VCT in 2019/20 when his income was 38,000. He disposed VCT shares for
12,000 in 2021/22 when his income was 27,000. Tax Consequences.
Practice Question No. 50:
Mr. X invested 25,000 in VCT in 2019/20 when his income was 52,000. He disposed VCT shares for
16,000 in 2021/22 when his income was 37,000. Tax Consequences.

8. ADVANCED TAXATION – 2020 / 21
Mr. D has Salary of 120,000 and Trading Income of 170,000. He made a Personal Pension Contribution
of 17,000. He also made Occupational plan contribution of 30,000 and his Employer Contributed
29,000 in Occupational Pension Plan. He has unused annual allowance brought forward of 19,000. Tax
Payable.
Mr. J has a Capital in Pension Plan of 2,200,000. He wants to extract Lump sum of 400,000. Compute
Tax.
Mr. J has a Capital in Pension Plan of 2,500,000. He wants to extract Lump sum of 300,000. Compute
Tax.
Mr. J has income of 135,000 during 20/21. He wants to invest 17,000 either in SEIS or pension. Advice?
Mr. A has income of 127,000 during 20/21. He wants to invest 11,000 either in SEIS or pension. Advice?
Mr. A has following income:
17/18 - $60,000
18/19 - $9,000
19/20 - $76,000
20/21 - $57,000
He invested 27,000 in SEIS in 18/19 and disposed it for 18,000 in 20/21. Tax?
Mr. J has following income:
17/18- $8,000
18/19- $24,000
19/20- $56,000
20/21- $34,000
He invested 40,000 in SEIS in 18/19 and disposed it for 28,000 in 20/21. Tax?
Mr. K has following income:
17/18 - $18,000
18/19 - $30,000
19/20 - $60,000
20/21 - $65,000
He invested 17,000 in EIS in 18/19 and disposed it for 40,000 in 20/21. Tax?
Mr. X invested 39,000 in VCT in 2018/19 when his income was 38,000. He disposed VCT shares
for 12,000 in 2020/21 when his income was 27,000. Tax Consequences.
Mr. X invested 25,000 in VCT in 2018/19 when his income was 52,000. He disposed VCT shares for
16,000 in 2020/21 when his income was 37,000. Tax Consequences.
Mr. K is being paid a Salary of 59,000 plus he is also being provided with Car having Car Benefit of
4,600 and fuel benefit 2,100. Required NIC.
PAGE 20
OWAIS
MIRCHAWALA

9. PAGE 157
I. = -
-
-
-
-
-
-
-
- -
-
- -
-
-
E- =
-
=
-
E- 5--7=-0--07 - -
-
-

10. PAGE 158
a- --e-
- -0
-

11. Dee -
5mar#
-
If Dee will invest in EB 0¥ UCT
,
he will
get
income tax
relief
which will reduce his income
tax
liability in
year of
investment
by lower
of
1
,
Tax
liability
2
,
30-1.
✗ Investment =
£50,000 ✗ 301 =
£15.000
-
This
relief
is same
for EKG UCT
, except only
difference
is that in EB
relief
can
get
carried back
uptill Year ,
whereas in UCT it
has to be claimed in same
year
.
-
Dividend income
from
UCT is
exempt from
income
tax
,
whereas in case
of
Els it is
chargeable
.
-
Holding period requirement for Els shares is
3yeo.rs,
whereas in vet shares it is b-
years
. In both
of
the investments
¥ holding period condition is not
satisfied,
then income tax
relief gets
withdrawn at lower
of
:
b
Original relief
2>
Disposal Proceeds ✗
Effective rate
of relief
.

12. PAGE 179
-
→0
@
Cost : €16,
ooo -
16,000€
ETEE.EE#-E
→ → ←
-
-0 - - - -
-
Fest 119
Ptameddyposal =
-
21/22
1essthan3jI_

13. PAGE 180
→
-
- - -
- - -
-
-
-
- -0 0

14. Pippin ciii ,
-
IF Pippin will sell Akero Ltd .
shares in
August 2021
Cat start
of
Pinoua business
'D ,
EIS
reliefs
will
get
withdrawn as he is
selling Els shares within
3yearb of
investment made in
January 2019 .
-
This will result in
following implications:
↳ Income tax
relief
will
get withdrawn
,
at
lower
g
:
f- 4,800 -
1)
Original relief
= 16.000
✗ 4000=1500
2) DP ✗
Effective rate
of relief
=
(5,0006h.
✗ €4 -
5)✗ 301=6750
-
This 1500 will be added in tax
liability
Of
2021/22
2) CGT reinvestment
relief of gain deferral
will
get chargeable for CGT.
-
Chargeable gain
= £16.000 ✗ 5,000--1=5--000
16,000
3 ,
Gain on sale
of
Els shares will
get
chargeable
.
DP = 5,000 Sh . ✗ £45 =
22,500
Cost =
1--16.000-+5000 =
(5000 )
16,000
chargeable gain
17.500