What is Investors’ Relief?

This is a new relief that enables investors to benefit from a 10% capital gains tax rate when they sell their shares in a company.

To benefit from Investors’ Relief (IR), investors must have obtained the shares on or after 17 March 2016, held them continuously for three years, and dispose of then on or after 6 April 2019.

As with ER, there is a £10 million lifetime limit for the relief.

The investment must be in an unlisted trading company and the investor must not be an officer or an employee of the company. The rules also apply to qualifying beneficiaries of trusts.

Conditions are included to ensure that the relief only applies to new shares issued for genuine commercial purposes. Also, only investors who are not connected to officers or employees of the company are eligible for the relief.

Tax incentives for investors through the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are still available in qualifying businesses. IR allows companies to raise additional funds outside these schemes, as well as potentially being attractive to investors who have exceeded the limits for EIS and SEIS.

Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

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