You have sold a buy-to-let, a second home, or a property you inherited. The gain is substantial, and within 60 days of completion HMRC expects a return and a payment. For a higher-rate taxpayer, 24% of that gain is leaving your hands almost immediately.
There is a mechanism in the tax system that lets you defer that liability rather than pay it: reinvesting the gain into EIS-qualifying companies. It is one of the less publicised features of the Enterprise Investment Scheme, and it applies to gains on any chargeable asset — including residential property.
This guide explains how EIS capital gains deferral works for property sellers: the current rates and deadlines, the reinvestment window, what deferral does and does not do, and the trade-offs involved.
Property CGT in 2026/27 — the current position
| CGT rate, basic-rate band | 18% |
|---|---|
| CGT rate, higher/additional-rate band | 24% |
| Annual exempt amount | £3,000 |
| Reporting and payment deadline | 60 days from completion |
| Applies to | Buy-to-let, second homes, inherited property, former main homes (part period), non-resident disposals |
The rates changed at the October 2024 Budget. The higher rate on residential property fell from 28% to 24%, and the rates on other assets rose to match — so property and shares are now taxed identically. Many articles on this subject still quote 28%; it has not applied since 30 October 2024.
Your rate depends on where the gain sits once stacked on top of your other income for the year. Income fills the basic-rate band first, up to £50,270; whatever room remains absorbs gain at 18%, and everything above is charged at 24%.
Example. A landlord with £45,000 of income sells a rental property with a £100,000 gain. After the £3,000 exempt amount, £97,000 is chargeable. £5,270 falls in the remaining basic-rate band at 18% (£949); the other £91,730 is taxed at 24% (£22,015). Total CGT: £22,964, payable within 60 days.
How EIS deferral works
Capital gains on the disposal of any chargeable asset can be deferred by reinvesting into EIS-qualifying companies. The mechanism is straightforward: you subscribe for new shares in a qualifying company, claim deferral relief on your Self Assessment return, and the CGT that would have been due is postponed.
Three features make it useful to property sellers specifically:
There is no cap on the gain that can be deferred. The £1 million annual limit that applies to EIS income tax relief does not apply to deferral. A £500,000 property gain can be deferred in full.
The window is generous. The EIS investment can be made up to one year before the gain arises, or up to three years after. For a sale completing in July 2026, the window runs to July 2029 — well beyond the 60-day payment deadline. You can pay the CGT now and reclaim it later through a deferral claim, or invest first and never pay it in the first place.
Connection rules are relaxed. Deferral relief is available even where an investor does not meet the "unconnected" test required for EIS income tax relief.
You can also defer the same gain more than once: when the EIS shares are eventually sold and the gain crystallises, reinvesting into further qualifying companies defers it again.
The same example, deferred. Return to the landlord above: a £100,000 gain and a £22,964 bill falling due within 60 days of completion.
Deferral is proportionate. Every £1 reinvested defers £1 of gain, and that £1 was being taxed at the top of the stack — so at 24%, every £1 invested defers 24p of tax. The decision is how much you want invested in EIS-qualifying companies, not how much tax you want to shift.
Say the landlord decides £25,000 is the right allocation. That defers £6,000 of the CGT, leaving £16,964 payable within the 60 days. The same £25,000 subscription also produces income tax relief at 30% — £7,500 — of which £6,486 can be set against this year's income tax bill, with the balance carried back a year.
| Reinvested | CGT deferred | CGT still payable |
|---|---|---|
| £10,000 | £2,400 | £20,564 |
| £25,000 | £6,000 | £16,964 |
| £50,000 | £12,000 | £10,964 |
| £100,000 | £22,964 | nil |
Deferring the full liability means putting the whole £100,000 gain into unlisted companies — which is why, in practice, most property sellers defer part of a gain rather than all of it. The absence of a cap matters for those with large gains who want that exposure anyway; for everyone else, the useful point is that the relief scales with whatever they choose to invest.
What deferral does — and does not — do
Deferral postpones the liability. It does not cancel it.
The deferred gain crystallises on a trigger event: you dispose of the EIS shares, the company loses its qualifying status, or you cease to be UK resident within the relevant period. At that point the gain comes back into charge at the rates applying then.
What changes in the meantime:
- The capital that would have gone to HMRC stays invested and working for three years or more
- Any growth on the EIS shares themselves is free of CGT after three years
- The EIS investment may also attract 30% income tax relief, subject to the separate £1 million annual limit and the connection rules
- Because gains crystallise when you choose to sell, you control the timing — and a portfolio built across several companies will typically reach exit in different tax years, letting you use several annual exempt amounts and, potentially, a lower personal rate
Who this applies to
Landlords exiting buy-to-let. Accumulated gains over long ownership periods, combined with the shrinking annual exempt amount, mean CGT bills of £20,000–£100,000+ are common on a single disposal.
Second home and holiday property sellers. The same rates apply. Private Residence Relief covers only a main home, and nominations rarely help where a property has never been lived in.
Inherited property. CGT is measured from the probate value rather than the deceased's purchase price, so gains are often modest where a sale follows soon after probate — but where a property has been held for years afterwards, or rose sharply in a strong market, the gain can be significant.
Former main homes. Where a property was a main residence for only part of the ownership period, relief is apportioned and the balance is chargeable.
Making the claim
Deferral is claimed on your Self Assessment return for the year in which the gain arose, using the EIS3 certificate issued by the company after it has traded for the required period. Where CGT on the property has already been paid within the 60-day deadline, the deferral claim recovers it.
The shares must be new ordinary shares subscribed for in cash — buying existing shares from another investor does not qualify. Keep the paper trail: share certificates, subscription documents, and the EIS3.
Our What is EIS? guide covers the scheme's other reliefs, and how to invest in EIS sets out the process end to end.