We are celebrating this festive time of year with a Christmas Selection Box of different tax reliefs and exemptions. As it is the time for giving and sharing, we hope that our "Box" will save you pounds rather than adding them!
C-H-R-I-S-T-M-A-S
I is for Investor's relief.
This relief reduces the rate of CGT paid on the disposal of unlisted company shares by persons who invest in shares by subscription. It has some similarities to Entrepreneurs' Relief (ER), but it is a different relief
Investors' Relief may be potentially useful to investors who have failed to qualify for EIS or SEIS relief, or non-director/employee shareholders who do not qualify for ER.
- It only applies to disposals made after 6 April 2019.
- It reduces the rate of tax charged on gains to 10% for higher rate taxpayers.
- Certain conditions must be met for the relief to apply:
- The investee company must be trading, or the holding company of a trading group.
- Shares must have been subscribed for in cash, they cannot have been acquired from someone else.
- Share investments must have been made on or after 17 March 2016 and held for three years.
- Like ER:
- The relief is subject to a lifetime cap of £10m. This is in addition to the ER limit.
- Unlike ER:
- There is no minimum per centage shareholding requirement.
- Investors (or persons connected to them) must not be officers or employees of the company on subscription.
- Shares are disqualified if the investor (or an associate) receives value from the company (or a connected party) in the period beginning one year before the share issue and three years after the share issue.
Investors relief: hacks
- As there is no minimum shareholding requirement and you do not have to be an officer or employee, and it has it's own lifetime limit independent of ER, IR may be a useful relief where a shareholder has sold out, resigned and claimed ER but has retained a few shares perhaps for sentimental reasons. When those final shares are sold IR may be available, as long as the individual was not an officer or employee when they subscribed for their shares.
- IR may be a useful fallback where ER claims will fail because holdings are too small, investors are not employees or shares have inadequate rights following the addition of further conditions to the 5% test from 28 October 2018.
Our selection box so far...
Useful subscriber resources:
EIS: Enterprise Investment Scheme
Which investment relief: IR, ER, SEIS or EIS?
At a glance: