Clarkslegal LLP - Solicitors in Reading and London

Legal Updates

Investor Relief

07 February 2020 #Corporate


The Finance Act 2016 introduced investor relief which is essentially a tax relief for Capital Gains in a similar way to the operation of Entrepreneurs Relief.  On qualification any capital gain is reduced from the usual capital gains rate – currently 20% to 10%.

The introduction of this relief was to incentivise investment in unquoted companies.

As ever, there are a number of qualifying conditions that must be met and strict requirements for an investor to qualify and these include having to hold ordinary shares continuously for period of at least 3 years.

Consequently, investor relief is quite new – the earliest application for it would have been April last year.

In addition to the minimum holding period, there are special rules about whether or not a director or non-executive director could qualify where they receive remuneration in respect of their office.

We often see investors making investments into non-listed companies and in may circumstances, they will want to take a seat on the board to support the growth of their investment and the business as a whole.

Given that wide curtailment of the application of Entrepreneurs Relief is anticipated in the forthcoming budget, it is likely that investor relief will seek greater popularity from angels or other investors.

Practitioners need to be careful in the drafting or advising of service contracts for those investor directors to ensure the remuneration structure does not disqualify their investment from the such relief.

 

 

Clarkslegal, specialist Corporate lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Corporate matter please contact Clarkslegal's corporate team by email at contact@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Read more articles

Ashan Arif

Ashan Arif
Partner

E: aarif@clarkslegal.com
T: 0118 960 4651
M: 07825 040 062

Stuart Mullins

Stuart Mullins
Partner

E: SMullins@clarkslegal.com
T: 0118 960 4672
M: 0777 630 5578

Contact

Corporate team
+44 (0)118 958 5321