»Ê¹ÚÌåÓýapp

TCGA92/S169VH and S169VI

Investors� Relief is available where qualifying shares are disposed of by trustees providing that certain conditions are met.

In essence the trustees of a settlement can use the unused Investorsâ€� Relief lifetime cap of eligible beneficiaries.  »Ê¹ÚÌåÓýapp trust itself does not have a lifetime Investorsâ€� Relief allowance of its own.

TCGA92/S169VH(2) defines an eligible beneficiary as an individual who:

• Has an interest in possession in the settled property (other than an interest in possession that has a fixed term) that consists of a holding which contains at least some qualifying shares.

• Has had such an interest in possession for at least three years up to the date of disposal.

• Has not at any time in that period  been a relevant employee of the issuing company.

»Ê¹ÚÌåÓýapp meaning of “relevant employeeâ€� is at TCGA92/S169VW.  See CG63550 for further details.

For a disposal by trustees to be potentially eligible for Investors� Relief there must be at least one eligible beneficiary immediately before the disposal.  For an example of how the relief works for trustees see CG63591 (link to trustee example).

Where there is a disposal of qualifying shares by the trustees the relevant amount (the amount to be charged at the Investors� Relief rate) refers to the aggregate of the eligible beneficiaries� share of the gain.  This means that the amount of the gain chargeable (subject to a valid claim) at the Investors� Relief rate is equal to the proportional entitlement of all eligible beneficiaries.  So if eligible beneficiaries are together entitled to 25% of the income from the settled property, 25% of the gain on qualifying shares is eligible for Investors� Relief (subject to a valid claim).

»Ê¹ÚÌåÓýapp gain is worked out in the normal way to arrive at the chargeable gain on the trust disposal.  If an eligible beneficiary has part of their Investorsâ€� Relief lifetime allowance available they will be able to make a joint claim with the trustees to have their ‘shareâ€� of the gain taxable at the Investorsâ€� Relief rate.  To the extent that an eligible beneficiary does not make a valid claim then the trustees will be liable to CGT at the normal rate.

As with disposals by individuals, if any eligible beneficiary has insufficient lifetime amount left to cover the entire gain attributable to them, the excess over and above the available lifetime cap is taxed at the normal CGT rate.  This is covered in TCGA92/S169VL, see CG63600.

Any amount of the lifetime cap used by an individual eligible beneficiary will reduce the amount of the lifetime cap available to carry forward and use for future chargeable gains (either further gains on trust assets of which they are an eligible beneficiary or gains made by them as an individual taxpayer).

See CG63500 for a general description of the relief and the layout of the guidance.