Corporate tax - Investors' Relief - Finance Act 2016

The Finance Act 2016 introduced Investors' Relief to subscriptions for new unlisted ordinary shares (including shares listed on AIM) made on or after 17 March 2016. It is aimed at investors located outside the business such as a business angel or friend rather than at business owners/ insiders who would look to Entrepreneur's Relief when selling. As a regime for the outside investor Investors' Relief is worth comparing with the Enterprise (EIS) and Seed Enterprise (SEIS) Investment regimes which are close relatives. Broadly while not quite as valuable Investors' Relief is more straightforward and may apply where EIS and SEIS do not.

Condition

EIS/SEIS

Investors' relief

Applicable Capital Gains Tax rate:

0%

10%

Lifetime limit for gains accessing reduced rate:

Not applicable

?10 million lifetime limit

Other tax reliefs:

IT relief, CGT deferral, loss relief

CGT only

Investee company trading/size/age restrictions:

Yes

Trading requirement only

Holding period:

3 years

3 years

Minimum shareholding size:

Not applicable

Not applicable

Maximum shareholding size:

30%

None

Type of shares:

Unlisted ordinary shares (incl. AIM shares)

Unlisted ordinary shares (incl. AIM shares)

Employee/officer:

Must not be*

Must not be*

Investee company with UK presence:

Required

Not required

* Some exceptions including for so-called "business angels"

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