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Capital Gains Tax reliefs on shares

If you sell, give away, exchange or otherwise dispose of shares certain tax reliefs can reduce your Capital Gains Tax bill. Your shares must meet certain conditions to qualify for these reliefs. Some reliefs are given 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 usually 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 usually '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 count as business assets if they are shares in a trading company or the holding company of a trading group and either of the following apply:

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

Giving things away includes giving them away for nothing or selling them for less than they’re worth.

If you sell shares for more than they cost you to buy them, but for less than their value at the time of sale you may still be entitled to 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 Help Sheet 295 - Relief for gifts and similar transactions.

Download the latest help sheet on relief for gifts and similar transactions - Help Sheet 295 (PDF 70K)

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Enterprise Investment Scheme

The Enterprise Investment Scheme offers tax incentives if you invest 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 the Enterprise Investment Scheme
  • 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 the Enterprise Investment Scheme.

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

If you make a gain by selling or disposing of something that is liable to Capital Gains Tax and invest your gain in Enterprise Investment Scheme shares, you can delay paying Capital Gains Tax on the amount of the gain equal to the amount you invested.

To receive this relief there is a period in which you must invest in Enterprise Investment Scheme shares - between one year before and three years after selling or disposing of your original assets.

Capital Gains Tax exemption

If you’ve received Income Tax relief on your shares under the Enterprise Investment Scheme you won't have to pay Capital Gains Tax when you sell or dispose of those shares if both of the following apply:

  • the Income Tax relief has not since been recovered
  • you have held your shares for at least three years

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Roll-Over Relief on transferring shares to a Share Incentive Plan

If you’re an employee and your employer operates a Share Incentive Plan you may be able to claim Roll-Over Relief if you do both of the following:

  • you sell or dispose of shares in an unlisted company to the administrator - ‘trustee’ - of a Share Incentive Plan
  • you use the sale proceeds to buy something else that would be liable to Capital Gains Tax when you sell or dispose of it

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 the section 'relief on transfers of shares to an approved share incentive plan' in Help Sheet 287.

Employee Share Schemes and Capital Gains Tax - Help Sheet 287 (PDF 72K)

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Entrepreneurs’ Relief

You may be able to claim Entrepreneurs’ Relief if you sell shares in a trading company (or the holding company of a trading group) after 5 April 2008 and both of the following apply:

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

If you qualify for Entrepreneurs’ Relief, the amount of qualifying gains liable to Capital Gains Tax is reduced by four-ninths, resulting in an effective rate of 10 per cent on all qualifying gains up to £1 million. Claims can be made on more than one occasion up to a £1 million lifetime limit.

Download the latest help sheet on Entrepreneurs' Relief - Help Sheet 275 (PDF 99K)

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Income Tax relief for losses on shares in unlisted companies

If you make a capital loss when you sell or dispose of unlisted shares in certain companies, this loss can be deducted from your taxable income in order to reduce your Income Tax. You can set the loss against your taxable income for the same tax year in which you made the loss, the tax year before or, if you have sufficient losses, both years.

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

Download the latest help sheet on Negligible Value Claims and Income Tax losses on shares - Help Sheet 286 (PDF 75K)

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Taper Relief for 2007-08 and earlier tax years

If you sold or disposed of an asset before 6 April 2008 you may be entitled to Taper Relief, which reduces the amount of the gain on which you pay Capital Gains Tax. The amount you reduce the gain to depends on:

  • how long you owned the shares
  • whether the shares were business assets

More about Taper Relief on shares

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More useful links

Shares - how to calculate capital gains

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