HMRC has updated its Capital Gains Manual to include guidance on investors’ relief, which can be found at CG63500P.
The relief was introduced in Finance Act 2016 to allow certain gains to be taxed at 10% and is available for individuals and trustees disposing of shares. Similar to entrepreneurs’ relief, there is a cap of £10m to the amount of gains that can benefit from the reduced rate of capital gains tax. To qualify for the relief a number of conditions must be met including:
Some of the conditions must be met for the entire shareholding period and so it is important for individuals to be aware of the conditions from the outset – and to keep their advisers informed.
Relief will be denied if an investor (or a person connected to them) is a relevant employee at any time from the date the shares are acquired to the date of disposal. A relevant employee is a person who has been an officer or employee of the issuing company or a company connected with it. There are some exceptions to the rule, for instance, in respect of unpaid directors.
To make a claim for the relief
Claims need to be made on or before the first anniversary of 31 January following the tax year in which the disposal is made.