What is investors relief for capital gains tax?
Answered 11 March 2026
Investors' Relief for Capital Gains Tax
What the law says
Nature of the relief
Investors' Relief (IR) is a relief provided under Chapter 5 of Part V of TCGA 1992 (ss.169VA–169VY), taking the form of a lower rate of CGT in respect of disposals of (and disposals of interests in) certain ordinary shares in unlisted companies.
Qualifying shares — conditions (s.169VB(2) TCGA 1992)
A share is a "qualifying share" at the time of disposal only if all of the following conditions are met:
| # | Condition |
|---|---|
| 1 | The share was subscribed for by the person making the disposal ("the investor") |
| 2 | The investor has held the share continuously from issue to disposal ("the share-holding period") |
| 3 | The share was issued on or after 17 March 2016 |
| 4 | At the time of issue, none of the company's shares or securities were listed on a recognised stock exchange (i.e. the company was unlisted) |
| 5 | The share was an ordinary share when issued and remains so at disposal |
| 6 | The issuing company was a trading company or holding company of a trading group when the share was issued, and has been so throughout the share-holding period |
| 7 | At no time in the share-holding period was the investor (or a connected person) a relevant employee in respect of that company |
| 8 | The period from issue to disposal is at least 3 years |
A share meeting conditions 1–7 but not yet held for 3 years is a "potentially qualifying share" and does not yet attract the relief.
The relief and applicable rates (s.169VC TCGA 1992)
The relief takes the form of a reduced CGT rate. The rate has been amended as follows:
| Period of disposal | Rate |
|---|---|
| Before 6 April 2025 | 10% |
| 6 April 2025 – 5 April 2026 | 14% |
| On or after 6 April 2026 | 18% |
Lifetime cap (ss.169VK–169VL TCGA 1992)
There is a cap on the total amount of gains that can qualify for the relief. With effect for disposals made on or after 30 October 2024, this cap was reduced from £10 million to £1 million — applying both to individuals (s.169VK) and to trustees (s.169VL).
Trustees
Where the disposal is made by trustees of a settlement, IR is only available if there is at least one eligible beneficiary — broadly, an individual with an interest in possession in the settled property throughout the 3 years ending with the disposal, who has not been a relevant employee of the company, and who has elected to be treated as an eligible beneficiary.
HMRC guidance / practice
Identifying qualifying vs excluded shares
HMRC's Capital Gains Manual illustrates the conditions with practical examples. Key points from HMRC's guidance:
- Shares in a listed company → excluded
- Shares in an investor's employer (i.e. investor is a relevant employee) → excluded
- Shares acquired from a third party (not subscribed for) → excluded
- Shares not fully paid up in cash at issue → excluded
- Shares meeting all conditions but held for less than 3 years → potentially qualifying (not yet eligible)
Transitional rules: Shares issued between 17 March 2016 and 5 April 2016 must be held for 3 years from 6 April 2016 (not from the date of issue).
Partial holdings: Where a holding contains a mix of qualifying, potentially qualifying and excluded shares, only the proportion attributable to qualifying shares attracts the relief, calculated as: Gain × Q/T (where Q = qualifying shares and T = total shares disposed of).
CGT rates in context: HMRC confirms that gains qualifying for IR are charged at the reduced rate (currently 10%, rising to 14% from 6 April 2025 and 18% from 6 April 2026), with other gains charged at 18% or 24% for individuals.
Citation sources
Part 1 Income tax, capital gains tax and corporate taxes Capital gains tax rates and reliefs Investors’ relief: increase in rate 9 1 In section 169VC(2) of TCGA 1992 (which specifies the rate of CGT for the relief), for “10%” substitute “14%” . 2 In consequence of the amendment made by subsection (1) , in section 1H(1)(b) of TCGA 1992 (which refers to the rate for investors’ relief), for “10%” substitute “14%” . 3 In consequence of the amendments made by subsection (1) and section 8 (1) , in sec
the criteria for a qualifying share (conditions 1-8 above) and does not meet the criteria for a potentially qualifying share. Shares issued before 17th March 2016 will always be excluded shares. Transitional Rules There are transitional rules for shares issued on or after 17 March 2016 but before 6 April 2016. Any shares issued between 17 March 2016 and 5 April 2016 must be held for a minimum holding period of 3 years starting from 6 April 2016. Value received by investor Where the investor rece
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter 5 Investors' relief Qualifying shares Qualifying shares, potentially qualifying shares and excluded shares 169VB 1 Where there is a disposal of all or part of (or of an interest in) a holding of shares in a company, this section applies to determine whether a share which is in the holding at the time immediately before the disposal (“ the relevant time ”) is for the purposes of this Chapter— a a qua
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter 5 Investors' relief Trustees of a settlement: special provision Disposals by trustees: further conditions for relief 169VH 1 Where a disposal falling within section 169VC(1)(a) and (b) is made by the trustees of a settlement, section 169VC does not apply to the disposal unless there is at least one individual who is an eligible beneficiary in respect of the disposal. 2 For the purposes of this secti
Part 1 Income tax, capital gains tax and corporate taxes Capital gains tax rates and reliefs Investors’ relief: reduction in amount qualifying for relief 10 1 In— a section 169VK(1) and (2) of TCGA 1992 (which specify the amount of gains qualifying for the relief in the case of disposals by individuals), and b section 169VL(2) and (3) of that Act (which specify the amount of gains qualifying for the relief in the case of disposals by trustees), for “£10 million” substitute “£1 million” . 2 The a
TCGA92/S169VD There are no special rules for calculating the gain on a disposal of shares that may qualify for Investors’ Relief. However, where the disposal involves a holding of shares and only some are qualifying shares, then only part of the gain will be subject to Investors’ Relief. To calculate the appropriate part of the gain which is subject to relief the following fraction must be applied– Gain x Q/T Q = number of qualifying shares in the holding T = total number of shares disposed of W
Net gains accruing in a year of assessment, after taking account of losses and the annual exempt amount (CG18000c), are charged to Capital Gains Tax at: 10 per cent if the gains qualify for Business Asset Disposal Relief (CG63950+) or Investors’ Relief (CG63500P). This rate will increase to 14 per cent from 6 April 2025 and then to 18 per cent from 6 April 2026. 28 per cent if the gains accrue on “carried interest” under section 103KA(2) or (3). This rate will increase to 32 per cent from 6 Apri
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter 5 Investors' relief Overview Overview of Chapter 169VA 1 This Chapter provides for a relief, in the form of a lower rate of capital gains tax, in respect of disposals of (and disposals of interests in) certain ordinary shares in unlisted companies. 2 Section 169VB defines “qualifying shares”, “potentially qualifying shares” and “excluded shares”. 3 Section 169VC creates the relief, and relief under