CG635000 - Investors’ Relief: Introduction and layout of guidance

The content in this manual covers a much higher level of detail compared to say a Helpsheet supporting the Self Assessment Tax Return. If you are looking for an introduction to the main rules for the relief for a particular year, please see the Investors' Relief (Self assessment helpsheet HS308) on GOV.UK and select the year you are considering.

Investors’ Relief applies a reduced rate of capital gains tax to certain share disposals by individuals or trustees.  It does not apply automatically but must be claimed.

The reduced rate is currently 10% and applies to gains within an individual’s lifetime cap which is currently £10 million.  Trustees can claim against the lifetime cap of an individual who is a beneficiary of the trust in certain circumstances.

Shares must be “ordinary” shares in a trading company which are not listed on a stock exchange.  The shares must have been issued on or after 17th March 2016, the date the relief was announced, and must have been held for three years before being disposed of, although shares acquired in certain reorganisations may be treated as having been acquired before the reorganisation.

The relief is intended to encourage and reward new investment so there are conditions to ensure that the shares are subscribed for with new money that benefits the company.  The relief is also targeted at external investors so is not usually available where the investor or an individual connected with them is employed by the company.   

Investors’ Relief does not affect the way the gain on a disposal of shares is calculated, but where not all the shares held would qualify for the relief there are rules that identify how much of the gain will qualify for the relief.  Although the relief will not be available for disposals before March 2019, there are also rules that take account of part disposals of shareholdings before that date that are designed to maximise the potential relief available to retained shares.  The rules therefore distinguish between shares that are -

  • Qualifying,
  • Potentially Qualifying (would qualify but not held yet for 3 years), and
  • Excluded (cannot qualify, including shares acquired before 17 March 2016)

These rules are quite complex but will not have to be considered in straightforward situations such as where shares in a company are first acquired on or after 17 March 2016 and are disposed of on or after 6 April 2019.

This is only a brief summary of how Investors’ Relief works, detailed guidance on the legislation at sections 169VA to 169VY TCGA 1992 is available in the following pages.  

Layout of the guidance

Subject

TCGA legislation

CG manual page

Main conditions and tax rate

S169VC

CG63510

Qualifying, potentially qualifying and excluded shares

S169VB

CG63520

Qualifying shares: meaning of subscribe

S169VU

CG63530

Qualifying shares: trading company condition

S169VV

CG63540

Qualifying shares: exclusion for relevant employees

S169VW to S169VX

CG63550

Claiming Investors’ Relief

S169VM

CG63560

Where not all shares are qualifying shares: apportionment

S169VD

CG63570

Where not all shares are qualifying shares: part disposals

S169VE to 169VG

CG63580

Disposals by trustees

S169VH and S169VI

CG63590

Disposals by trustees: example

-

CG63591

Applying the lifetime cap

S169VK and S169VL

CG63600

Joint holdings of shares

S169VJ

CG63610

How long shares have been held: share reorganisations

S169VN to 169VP

CG63620

How long shares have been held: share exchanges

S169VQ to S169VT

CG63630

When shares cease to qualify

Schedule 7ZB

CG63640 to CG63644