Investors Relief – Do you qualify?
Investor’s Relief (‘IR’) came into play 17 March 2016, so by no means is it new.
So why are we talking about it? Well, the conditions imposed to qualify for the relief where that shares had to be held for three years post introduction of the relief. This means that the 2018/19 tax year was the first year a claim was possible, but we suspect more people will qualify in the 2019/20 tax year.
What is it all about then? IR allows for a flat rate of ten percent on qualifying capital gains up to a lifetime limit of £10 million. It forms part of the group of tax reliefs which aim to encourage investment and entrepreneurial activity. It broadly works along the same lines as the more well-known Entrepreneur’s Relief (‘ER’), albeit IR is targeted at non-working investors (i.e. not a Director or Employee at time of subscription), but it may also be considered when relief may no longer be available via such schemes as EIS and SEIS.
To qualify for IR, you had to have subscribed for ordinary shares (fully paid up) in an unlisted trading company, to which neither you nor a person connected to you, is associated with.
When considering the structure of future investments, IR might be something to factor into your decision-making process to expand your investment opportunities. Although the lifetime limit for ER was reduced from £10 million to £1 million in the March 2020 budget, the lifetime limit for IR remains at £10 million and therefore, if available to you, should be utilised to the fullest extent while you still can.
If you currently hold investments and/or are considering making a new investment, but you’re uncertain as to what relief might be available, please do get in touch and we can assist you in looking at your options.