Capital Gains Tax reliefs on shares

If you sell, give away, exchange or otherwise dispose of shares, tax reliefs can reduce your Capital Gains Tax bill. Your shares must meet certain conditions to qualify for these reliefs. You will receive some reliefs automatically - you can claim others in writing.

On this page:

Gift Hold-Over Relief

How the relief works

If you claim Gift Hold-Over Relief and full relief is due, you won't have to pay Capital Gains Tax when you give away the shares. Instead the whole of the gain is postponed or 'held over' until the person you give the shares to finally sells or disposes of them. You 'dispose of' an asset when you cease to own it.

The held-over gain is worked out using the 'market value' of the shares on the day you no longer own them. Market value is the price that your shares might reasonably be expected to get if you sold them in the open market.

Who qualifies?

If you give away business assets you may be able to claim Gift Hold-Over Relief. Shares you own personally may count as business assets. To do so they must be shares in a trading company or the holding company of a trading group and either of the following must apply:

  • the shares or securities are not listed on any recognised stock exchange
  • you have at least 5% of the voting rights in the company in question

Giving things away includes both:

  • giving them away for nothing
  • selling them for less than they’re worth

If you sell shares for more than they cost, but less than their value when sold, you may claim relief for part of the gain.

Find out more about trading companies in the glossary

See a list of recognised stock exchanges

How to claim

You must claim Gift Hold-Over Relief jointly with the person you gave the shares to. The exception is when you give shares to the trustees of a settlement - then you can make an individual claim.

If you want to make a claim you should fill in the form in Helpsheet 295 - Relief for gifts and similar transactions.

Download the latest helpsheet on relief for gifts and similar transactions - Helpsheet 295 (PDF 128K)

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Enterprise Investment Scheme

The Enterprise Investment Scheme (EIS) offers tax incentives if you invest in shares in smaller, unlisted companies. The scheme provides the following Capital Gains Tax reliefs:

  • Capital Gains Tax Deferral Relief, when you reinvest a gain on an asset in shares under EIS
  • exemption from Capital Gains Tax when you sell or dispose of the shares

Income Tax relief is also available if you invest in shares through EIS.

Types of companies you can invest in through the Enterprise Investment Scheme

Find out about the Enterprise Investment Scheme and Income Tax relief

Capital Gains Tax Deferral Relief

This relief may allow you to delay paying Capital Gains Tax on a gain if you invest your gain in EIS shares. You can receive relief in respect of gains equal to the amount you invest.

To receive this relief you must invest in EIS shares between 1 year before and 3 years after selling or disposing of your original assets.

Capital Gains Tax exemption

You won't have to pay Capital Gains Tax when you sell or dispose of shares if all the following conditions apply:

  • you've received Income Tax relief on your shares under EIS
  • the Income Tax relief has not since been recovered
  • you have held your shares for at least 3 years

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Seed Enterprise Investment Scheme

The Seed Enterprise Investment Scheme (SEIS) offers Income Tax relief at a higher rate than the Enterprise Investment Scheme. It applies to new shares in small early-stage companies bought on or after 6 April 2012.

For 2012-13 only, if you dispose of an asset and reinvest all or part of the gain in shares which qualify for SEIS income tax relief, the amount you reinvest is exempt from Capital Gains Tax. This applies to investments up to £100,000.

For gains in 2013-14, when those gains are re-invested during 2013-14 or 2014-15, half the reinvested gain up to £100,000 is exempt from Capital Gains Tax.

Read more about the Seed Enterprise Investment Scheme

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Roll-Over Relief on transferring shares to an approved Share Incentive Plan

If you're an employee and your employer operates an approved Share Incentive Plan you may be able to claim roll-over relief if you do both of the following:

  • sell or dispose of shares in an unlisted company to the trustees of the Share Incentive Plan
  • use the sale proceeds to buy assets that would be liable to Capital Gains Tax when you sell or dispose of them

Claiming roll-over relief means you won't have to pay Capital Gains Tax until you sell or dispose of the new assets you have bought.

You can find out more about this relief and how to claim it in Helpsheet 287. Look in the section ‘Relief on transfers of shares to an approved share incentive plan’.

Employee Share Schemes and Capital Gains Tax - Helpsheet 287 (PDF 80K)

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Entrepreneurs' Relief

You may be able to claim Entrepreneurs’ Relief if you sell shares in a trading company and both of the following apply throughout the year ending on the date you sell the shares:

  • you worked for the company
  • you owned at least 5% of the ordinary shares in the company which gave you at least 5% of the voting rights

This also applies if you sell shares in the holding company of a trading group.

The maximum lifetime limit

There’s a maximum lifetime limit on the amount of Entrepreneurs’ Relief you can claim on qualifying gains.

Lifetime limit for Entrepreneurs' Relief

From 6 April 2010

the first £2 million of gains made

From 23 June 2010

the first £5 million of gains made

From 6 April 2011

the first £10 million of gains made

How the relief works

You can make claims for Entrepreneurs' Relief on more than one occasion. The total qualifying gains in all your claims must not exceed the lifetime limit.

For 2013-14 all qualifying gains up to the maximum lifetime limit are taxable at 10%.

Download the latest Helpsheet on Entrepreneurs' Relief - Helpsheet 275 (PDF 134K)

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Income Tax relief for losses on shares in unlisted companies

To reduce your Income Tax, you can deduct a loss you make when you dispose of unlisted shares you have subscribed for in certain companies. You can set the loss against your taxable income for:

  • the tax year in which you made the loss
  • the tax year before
  • both years, if you have sufficient losses

You can find out more about this relief in the section 'claim to set loss against income' in Helpsheet 286.

Download the latest helpsheet on Negligible Value Claims and Income Tax losses on shares - Helpsheet 286 (PDF 80K)

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More useful links

Shares - how to calculate capital gains