CG63550 - Investors’ Relief: relevant employee

TCGA92/S169VW

Whether an individual is a relevant employee is important for the purposes of:

• S169VB(2)(g) – a share cannot be a qualifying share if the investor or a person connected with the investor is a relevant employee of the company at any time in the period between acquisition and disposal of the shares.

• S169VH(2)(c) – an individual cannot be an eligible beneficiary if they are a relevant employee within the period of 3 years ending with the disposal of the shares by the trustees.

A relevant employee is a person who has been at any time in the relevant period an officer or employee of the company in which the shares are issued, or of a company connected with the issuing company. Where they are a relevant employee in relation to a connected company, they are regarded as being a relevant employee of the issuing company.

There is an exception for unpaid directors of the company who prior to the relevant period have not been involved in carrying on the whole or any part of the trade, business or profession carried on by the issuing company or a connected company.

A person will not be treated as a relevant employee if they become an employee (not a director) of the issuing company (or a company connected) more than 180 days after the commencement of the relevant period and if at the beginning of the relevant period there were no real prospects that the person would become an employee.

See CG63500 for a general description of the relief and the layout of the guidance.