What is Investors Relief?

Full answer

Investors Relief (IR) is a Capital Gains Tax relief that provides a reduced rate for external investors in unlisted trading companies who are not involved in the running of the business. **2026/27 Investors Relief rate: 18%** (Increased from 10% to 14% from 30 October 2024, then to **18% from 6 April 2026**, aligning with Business Asset Disposal Relief.) **Lifetime limit:** £10 million of qualifying gains (much higher than BADR's £1 million) **Qualifying conditions:** 1. The shares must be in an **unlisted trading company** (or holding company of a trading group) — AIM-listed shares may qualify if the company is not treated as listed for these purposes. 2. You must have subscribed for the shares (not bought them on a secondary market in most cases). 3. You must have held the shares for at least **3 years** (BADR requires 2 years). 4. You must **not be an employee or director** of the company at any time during the 3-year holding period — this is the key distinction from BADR. 5. Shares must have been issued on or after 17 March 2016. **How it differs from BADR:** | Feature | BADR | Investors Relief | |---|---|---| | CGT rate (2026/27) | 18% | 18% | | Lifetime limit | £1M | £10M | | Must be employee/director | Yes | No (passive investor) | | Minimum holding period | 2 years | 3 years | | Listed shares | No | No (unlisted only) | **EIS/SEIS interaction:** EIS and SEIS shares also qualify for Investors Relief (subject to conditions), but EIS/SEIS investors typically claim EIS CGT deferral or SEIS re-investment relief first, which may make IR less relevant. **How to claim:** On your Self Assessment return in the year of disposal. Both the investor and the company should retain records of subscription date, share details, and holding period.

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