Unpacking UK tax reliefs – a seriesPublished on 15 Jun 2020
Number 1: Investors’ Relief
First introduced in 2016, Investors’ Relief (IR) offers investors the opportunity to pay lower rates of Capital Gains Tax (CGT) on profits they make when they invest in unlisted companies. On the sale of shares, the investor pays a reduced CGT rate of 10% on gains of up to a £10 million lifetime limit.
The relief therefore offers investors prepared to invest in unlisted companies (and AIM) an attractive tax break. The relief can be combined with other entrepreneurial tax breaks such as Business Investment Relief (tax-free remittances) and Business Property Relief (IHT) to help reduce the tax bill and increase an investor’s overall return. However, like many tax breaks, the rules are tightly drawn and appropriate advice should be taken.
IR at a glance
For a taxpayer to qualify for IR, a qualifying person must:
What is a qualifying person?
A qualifying person is either an individual or the trustees of an interest in possession trust.
How does IR affect employees?
Employees of a qualifying company do not qualify for IR. Directors also do not qualify, unless the director is unremunerated.
Shares qualify under IR if:
Vivian Haines is a Director of Stonehage Fleming Law Limited
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