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TCGA92/S169VJ

S169VJ ensures that where a qualifying person disposes of an interest in a relevant holding Investors� Relief is potentially available where the subscription was made jointly with one or more other individuals.

Where a share is jointly owned then each person will own an interest in that share. S169VJ allows Investors� Relief to apply when shares are held jointly so that the disposal by an individual investor is of their ‘interest� in the shares.

Example

Francis, Kim, Joey and David are friends who pool money to make small investments in unquoted companies. »Ê¹ÚÌåÓýappy don’t always agree so not all of them may choose to invest in a particular company at a particular time. Assume all other conditions for Investorsâ€� Relief are met.

»Ê¹ÚÌåÓýapp following share subscriptions are made in P Ltd -

June 2016 � they all agree it looks a good prospect so subscribe for 500 shares between the four of them.

January 2017 � Francis, Kim and Joey subscribe for another 350 shares together; however David preferred to invest in a higher risk company.

August 2017 � Francis received a small inheritance and used some of it to buy 500 P Ltd shares.

September 2017 � P Ltd makes a rights issue, this time only Francis and Joey feel it is a good investment and jointly buy 150 shares.

Looking at Francis’s holding, he has sole ownership of 500 shares and an interest in another 1000. »Ê¹ÚÌåÓýapp proportionate interest in shares varies.

For Investors� Relief purposes Francis has the following holding�

Initial holding at June 2016 (500/4) 125

Add January 2017 (350/3) 117 (rounded)

Add August 2017 500

Add September 2017 (150/2) 75

Holding at September 2017 817

Partnerships and LLPs

Where a partnership (or an LLP, which is normally treated for tax purposes as a partnership) subscribes for shares, the individual partners are treated as having themselves subscribed (section 59(1)(b)). It is not necessary for the partners to have directly funded the subscription: the new consideration given for the shares may have come out of partnership funds. In cases of “partnership subscriptionsâ€�, therefore, each partner is deemed to have subscribed for a fraction of the total shares issued. »Ê¹ÚÌåÓýapp fraction is to be the same as the partner’s fractional share in the assets of the partnership at the time the shares are issued.

By way of example, if a partnership of four individuals with asset shares in the ratio 40:30:20:10 subscribes for 1000 shares, the partners are treated as having subscribed for 400, 300, 200 and 100 shares respectively.

If a new partner is admitted and each existing partner transfers 10% of their asset-share to the new member then they are treated as disposing of (40+30+20+10) shares eligible for Investorsâ€� Relief. »Ê¹ÚÌåÓýapp new member will not be able to claim Investorsâ€� Relief on the 100 shares as she is treated as acquiring the shares as she did not subscribe for them.

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