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