What is it?

Investors relief is a capital gains tax relief which has the effect of reducing the rate of capital gains tax to 10% of qualifying disposals.

When is it available?

Investors relief is available when an individual makes a disposal of a qualifying shares in a trading company or holding company of a trading group.

What is the effect of claiming Investors' relief?

When the claim is made, the eligible gains will be taxed at 10%. Gains eligible for investors relief are treated as using up the unused basic rate band in priority to other non-qualifying gains (residential property gains, gains not eligible for BADR...)

What is the limit

There is a lifetime limit of £10m (cumulative gains on which investors relief can be claimed)

The conditions (in brief)

• Shares must be issued on or after 17^th March 2016
• Shares must be held continuously for a period of at least 3 years
• The shares must be new ordinary shares
• Shares must be subscribed for cash
• The company must have been unlisted by the time the shares were issued
• The relief is only available to individuals who are not a relevant employee (someone who is not a director or employee of the company or a connected company during the 3-year holding period).
• Unless the individual becomes an unremunerated director after the purchase or
• Becomes an employee 180 days after the issue of shares (provided there were no reasonable prospect they would become an employee at the time of issue of shares).

The deadline

First anniversary of the 31st Jan following the tax year of disposal.

Planning points / EIS/SEIS interaction

When the subscriber transfers shares to a spouse, the spouse is treated as having subscribed for the shares at the original date

A subscription for shares in an unlisted trading companies may qualify for EIS / SEIS income tax relief if the conditions for the relief are met.

Provided certain conditions are gains on sales of shares in respect of which SEIS/EIS income tax relief has been claimed, will be exempt from CGT.

A claim for IR may only be relevant when the original subscription for shares the did not receive IT relief. This is likely to be case if the conditions for relief are not et, such as:

• The trade doesn't qualify for EIS/SEIS relief.
• Individual is connected with the company
• The maximum investment for EIS / SEIS has been exceeded.

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