As announced in the Autumn Budget 2024, the government will introduce legislation in the Finance Bill 2024/25 to reduce the Investors’ Relief (IR) lifetime limit from £10m to £1m for qualifying disposals made on or after 30 October 2024.
Investors’ Relief provides for a lower rate of capital gains tax (CGT) to be paid on the disposal of ordinary shares in an unlisted trading company where certain criteria are met, subject to a lifetime limit of £10m of qualifying gains for an individual.
This measure reduces the lifetime limit from £10m to £1m for IR qualifying disposals made on or after 30 October 2024.
Additionally, the CGT rate applicable to Business Asset Disposal Relief and Investors’ Relief will increase to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.
Rules will be introduced that apply to forestalling arrangements where there has been a reorganisation of a company’s shares before 30 October 2024. Following a reorganisation a shareholder can make an election under section 169VT of TCGA 1992 to trigger a gain at the time of the reorganisation in order to claim IR.
Where a shareholder continues to meet the conditions for claiming IR on 30 October 2024 and makes the election after that date, then the share disposal will be treated as taking place at the time the election is made for the purposes of the IR lifetime limit. This means that gains will be subject to the new lifetime limit of £1m.
