For Financial Advisers Only. This tool is designed for use by UK-regulated financial advisers and is not intended for retail investors.
Your client is being taxed twice on the same capital. Triple elimination changes that.
When a client sells investment property, they pay CGT on the gain. The net proceeds then sit in the estate — exposed to 40% IHT. EIS can eliminate both taxes, plus reset the base cost for beneficiaries.
Two taxes. One strategy.
CGT on disposal and IHT on death combine to erode more than half of a property gain.
IHT Rate
40%
On everything above the nil rate band. Thresholds frozen until 2030.
BPR Cap (From April 2026)
£2.5m
Per-estate cap on 100% Business Property Relief. Increased from £1m on 23 December 2025.
CGT on Property
24%
Residential property gains at higher rate. No BADR.
A £1m property gain at 24% CGT leaves £760,000. That £760,000 then attracts 40% IHT on death — another £304,000. Total tax: £544,000 on a £1m gain.
Convert CGT-exposed cash into IHT-exempt assets.
Convert CGT-exposed cash into IHT-exempt assets.
Instead of paying CGT and leaving the proceeds in the estate, your client invests the gain into EIS-qualifying shares. This defers the CGT immediately. After 2 years, the EIS holding qualifies for 100% Business Property Relief — dropping out of the estate for IHT purposes entirely (within the £2.5m combined APR/BPR allowance).
At death, the deferred CGT is permanently eliminated (Schedule 5B, TCGA 1992), the EIS holding passes IHT-free via BPR, and beneficiaries inherit at market value with a reset base cost. Three taxes, one investment.
Who this calculator is for
Clients who are liquidating a property portfolio and have substantial capital gains. The estate is above the nil rate band and exposed to IHT. The client does not need the capital for income or lifestyle spending and can commit capital for 2+ years (BPR) and likely much longer. Professional estate planning advice has been taken.
Estate planning in three steps
Today — On Investment
30% income tax relief returned immediately. CGT on the property gain is deferred. Cash that would have gone to HMRC is now in a tax-advantaged structure.
After 2 Years — BPR Kicks In
EIS shares qualify for 100% BPR (s.106 IHTA 1984 — 2-year minimum ownership, within £2.5m per estate from 6 April 2026). The holding is effectively outside the IHT estate.
At Death — Triple Elimination
Deferred CGT eliminated permanently. No IHT on EIS (BPR). Beneficiaries inherit at market value with reset base cost.
No other single investment structure delivers this combination.
Deferred CGT Eliminated
The deferred gain dies with the client. Permanently. No CGT is ever paid on the original property gain.
Ref: Schedule 5B, TCGA 1992
IHT Eliminated on EIS
100% Business Property Relief (within £2.5m). The EIS holding passes to beneficiaries free of inheritance tax.
Ref: s.105 IHTA 1984
Base Cost Reset
Beneficiaries inherit at market value. Only gains arising after inheritance are taxable. Clean slate.
Ref: s.62 TCGA 1992
Understanding the £2.5m threshold
Within the £2.5m cap
EIS holdings up to £2.5m receive 100% BPR — no IHT. This is the optimal zone for estate planning via EIS.
Above the cap
Holdings above £2.5m receive 50% BPR — effective 20% IHT rate. Still better than full 40%, but reduced. Consider splitting across spouses.
Combined with AIM
The £2.5m cap is shared across all BPR-qualifying assets including AIM. Clients transitioning from AIM should consider combined exposure.
Model it for your client
Enter the property gains and EIS amount to compare paying CGT versus deferring via EIS.
Total gains: £850,000
Slide to apply BADR (14%) to qualifying gains. Most property gains don't qualify — but furnished holiday lets and some business property may.
What happens today
This cash stays with your client
Cash advantage vs paying CGT now
Extra cash your client keeps today
At death (triple elimination)
Heirs at 1× (capital returned)
£1,003,000
+£615,400 vs paying CGT
At 2× (tax-free growth)
£1,853,000
Returns not guaranteed. CGT eliminated + IHT-free + base cost reset.
If it fails (total loss, alive)
Effective loss per £1
38.5p
at 45% tax rate
40%: 42.0p per £1
20%: 56.0p per £1
At death (EIS at 0×)
Net to heirs
£153,000
vs £387,600 without EIS
Deferred CGT still eliminated. IHT on remaining cash only.
The EIS only needs to return 0.28x for heirs to receive more than paying CGT and leaving cash in the estate. Above that, growth is tax-free after 3 years (not guaranteed).
CGT Eliminated
£204,000
IHT Avoided
£340,000
Relief Received
£255,000
Full comparison: pay CGT vs defer via EIS
| Item | Pay CGT & Leave | Defer via EIS |
|---|---|---|
| Total gains | £850,000 | £850,000 |
| CGT paid today | −£204,000 | £0 |
| EIS invested | — | −£850,000 |
| Income tax relief (30%) | — | +£255,000 |
| Cash after CGT | £646,000 | £255,000 |
| IHT at 40% (on cash) | −£258,400 | −£102,000 |
| EIS at 1× (BPR: IHT-free) | — | +£850,000 |
| Net to heirs at 1× | £387,600 | £1,003,000 |
All return scenarios: 0× to 3×
| EIS Return | Net to Heirs (EIS) | vs Pay CGT |
|---|---|---|
| 0× (total loss) | £153,000 | -£234,600 |
| 0.28× (break-even) | £387,600 | +£0 |
| 1× (capital returned) | £1,003,000 | +£615,400 |
| 2× | £1,853,000 | +£1,465,400 |
| 3× | £2,693,000 | +£2,305,400 |
Estate planning via CGT deferral — the details
Is estate planning via EIS right for your client?
Most Suitable For
- ✓Client is liquidating a property portfolio and has substantial capital gains
- ✓Estate is above the nil rate band and exposed to IHT
- ✓Client does not need the capital for income or lifestyle spending
- ✓Client can commit capital for 2+ years (BPR) and likely much longer
- ✓Estate is within the £2.5m BPR cap (or can be structured across spouses)
- ✓Client understands and accepts venture capital risk
Key Risks to Consider
- ⚠Capital loss: EIS investments may fail, total loss possible
- ⚠Client must survive 2 years: BPR does not apply if death occurs earlier
- ⚠Illiquidity: No secondary market; expected hold 5–10 years
- ⚠£2.5m BPR cap: Shared with AIM and other BPR assets
- ⚠Beneficiary CGT: Inherited EIS shares lose s.150A exemption
- ⚠Legislative risk: BPR rules, IHT rates, and caps may change
- ⚠No FSCS protection
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This tool is for illustrative purposes only and does not constitute financial advice. EIS investments carry significant risks, including loss of capital, illiquidity, and the potential for HMRC to withdraw tax reliefs. Tax treatment depends on individual circumstances and may be subject to change.
Past performance is not a reliable indicator of future results. The value of investments and income from them can go down as well as up and investors may not get back the amount originally invested.
Ascension Ventures is authorised and regulated by the Financial Conduct Authority (FRN: 833506). Tax reliefs referred to are those applying under current legislation, which may change. The availability of tax reliefs depends on individual circumstances.