Investors' Relief reduces the rate of Capital Gains Tax (CGT) paid on the disposal of unlisted company shares by persons who invest in shares by subscription.
Subscribers, see Investors' Relief: Subscriber guide for your detailed version of this guide.
This is a freeview 'At a glance' guide to Capital Gains Tax Investors' Relief.
At a glance
Investors’ Relief (IR)
Investors' Relief is a Capital Gains Tax (CGT) relief, available to individual investors.
It applies to gains made on the disposal of investments in ordinary shares and works by reducing the rate of CGT charged on qualifying gains to 10% for higher and additional rate taxpayers.
- The original share investment must have been made on or after 17 March 2016 and held for three years from 6 April 2016.
- The shares must have been subscribed for in cash.
- The disposal must be made on or after 6 April 2019.
- The unlisted investee company must be trading or the holding company of a trading group.
Although IR has some similarities to Business Asset Disposal Relief (BADR) (Entrepreneurs' Relief), IR is a different relief:
- It is designed for investors who are not actively involved in the business, e.g. investors on the AIM market and business angels.
Like BADR:
- Investors' Relief is subject to a lifetime cap. For IR this is £10 million.
- The £10 million cap for IR is in addition to the £1 million (£10 million to 11 March 2020) lifetime cap for BADR.
- Investments must be in unlisted shares.
- The company must be a trading company.
Unlike BADR:
- There is no minimum percentage shareholding requirement.
- Investors or persons connected to them must not be officers or employees of the company on subscription.
- Business angel investors may later become unpaid directors or, in some cases, paid employees.
- Investors must not receive value in respect of their shareholdings. Dividends are allowed.
- Investments must be made on or after 17 March 2016, and held for at least three years starting from 6 April 2016.
- If a shareholder disposes of a shareholding consisting of qualifying and non-qualifying shares, only a proportion of the gain will qualify for IR.
Detailed CGT relief guides for subscribers
| Business Asset Disposal Relief Index | |
|
Business Asset Disposal Relief (Entrepreneurs' Relief): overview |
How the relief works |
| Tracker: What's new? | |
| Planning points | |
| Different forms of BADR: | Applies to: |
| Sole traders or partners: s.169I(2)(a) TCGA 1992 | |
|
Disposal of the assets of a business following its cessation |
Sole traders or partnerships: s.169I(2)(b) |
| Disposal of shares or securities in a company | Officer or employee shareholders |
| Disposal of a joint venture interest | Joint venture officer or employee shareholders |
| Disposal of trust business assets | Trustees |
| Disposal associated with a material disposal | Shareholders or partners |
| Alternative reliefs | |
|
|
Investor shareholders (not officers or employers, on subscription) |
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