CGT Investors’ Relief

In his Budget speech the Chancellor reduced the Capital Gains Tax (CGT) rate from 28% to 20%, except for residential property. However, since 2008 there has been a CGT relief under which the rate of CGT has been reduced to 10%. This is the Entrepreneurs’ Relief, details of which are contained in Ch 3 of Pt 5 Taxation of Chargeable Gains Act (TCGA) 1992. This relief is given to individual taxpayers who dispose of a trading business, or an interest in a trading business, or a shareholding in a trading company of which they are an officer or employee. This relief is also available to trustees, where assets held in trust are used for an unincorporated trading business by a beneficiary with an interest in possession, for a shareholding in a trading company of which a beneficiary with an interest in possession is an officer or employee, and in which he has at least a shareholding. Now, the Chancellor is allowing the benefit of a 10% CGT rate to pure investors in unquoted trading companies, who are not officers or employees. In the Finance Bill, the new Ch 5 of Pt 5 of the TCGA 1992 limited the new relief to individuals. However, the Chancellor has now tabled an amendment which will extend the new relief to trustees.