Investor Relief Investor Relief

What is Investors Relief

Investors relief is a government scheme implemented to reduce the capital gains tax on the disposal of shares in a private trading company that is not listed on the stock exchange. It applies to shares that are issued on or after 17 March 2016 that are disposed of on or after 6 April 2019, as long as the shares have been owned for at least 3 years up to the date of disposal. It is not usually available if you or someone connected with you is an employee of the company. Qualifying capital gains for each individual are subject to a lifetime limit of £10 million.

Qualifying Conditions

To qualify for Investors’ Relief, you have to have subscribed for shares that meet the relevant qualifying conditions throughout the period you have owned them and that you have owned for at least 3 years. The main conditions that must be met are:
• Share owned are all ordinary shares in the company
• They were fully purchased in cash and were fully paid up when issued
• the company is a trading company or the holding company of a trading group
• none of the company’s shares are listed on a stock exchange
• neither you nor any person connected with you is an employee of the company or a company connected with it

Why consider?

Investors Relief is highly attractive to investors, especially those who used up their lifetime Business asset disposal relief allowance, as its another form of tax relief they can use. It also is used as an incentive to attract investment into unlisted companies, allowing their growth, and contributing to a wider market for investing in not exclusive to those listed on the stock market.

Comparison to other Tax reliefs

The commercial background of any potential investment will determine the availability of reliefs but, where flexibility exists, individuals are likely to want to consider the relative pros and cons of different reliefs.

Maximum investment £1m a year1 None None
Income tax relief 30% None None
CGT 0% 10% 10%
Cap on gains relieved None £1m £10m
Income tax loss relief Yes No No
Reinvestment/ rollover relief Yes No No
Ownership Less than 30% More than 5% 2 None
Employee/ director involvement ‘Business angels’ only 3 Required Not permitted 3
Holding period 3 years 2 years 3 years
Use of pre-existing shares 4 No Yes No

• EIS – Enterprise Investment Scheme
• BADR – Business Asset Disposal Relief
• IR – Investors Relief

Making a claim

Investors’ Relief must be claimed, either by the individual or, in the case of trustees of settlements, jointly by the trustees and the eligible beneficiary. You must claim to HMRC in writing by the first anniversary of the 31 January following the end of the tax year in which the qualifying disposal takes place. For qualifying share disposal in the tax year 2019 to 2020 (ending on 5 April 2020) a claim for Investors’ Relief must therefore be made by 31 January 2022. A claim to Investors’ Relief may be amended or revoked within the time limit for making a claim.
If you or your business requires assistance in claiming Investors’ relief, please contact Wim Accountants at 02082271700 or

Originally posted 2022-06-30 10:19:22.

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