After you sell your company
If you own shares in a family trading company they are treated as business property for inheritance tax (IHT) purposes and can pass to your heirs tax-free on your death.
If the next generation are not interested in carrying on the family business, you may decide to sell the shares. The problem with this is that the money you receive will not be business property and will therefore be charged to IHT (probably at 40%) if you still have it when you die. You will also be charged capital gains tax (CGT) at 10% or 20% when you sell the shares.
If, within the period beginning one year before the sale and ending three years after the sale, you reinvest some or all of the proceeds in a qualifying Enterprise Investment Scheme (EIS) investment, you can hold-over the capital gain. If you reinvest within two years after the sale you will also retain the IHT business property relief. Whether or not you claim to defer the capital gain, you will also be able to claim 30% of the amount invested against your income tax liability. That income tax relief can be split between the tax year during which you acquire the EIS investment and the previous tax year. There will be no capital gains tax payable on the sale of the EIS investment if held for at least three years (any deferred gains tax would, however, be payable on that occasion), but any losses can be set off against gains arising in the same or future years (including the deferred gain).
The income tax relief is restricted to an EIS investment of £1 million.
EIS investments are regarded as high-risk and your investment would not be protected. However, some qualifying investments are asset-backed and some can even provide an income-stream.