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ACCA Applied Skills · Taxation (UK) · Gains and losses on the disposal of shares and securities

Which of the following statements about investors' relief is correct?

Investors' relief is available on newly subscribed shares in an unlisted trading company held for the required period, by investors who are not officers or employees. Qualifying gains up to the £1,000,000 lifetime limit are taxed at 14%.

  1. AIt applies to shares in an unlisted trading company subscribed for by the investor, with a lifetime limit of £1,000,000 and a 14% rateCorrect
  2. BIt applies to any shares purchased on the open market, with a 14% rate
  3. CIt has a lifetime limit of £10,000,000 and requires the investor to be an employee
  4. DIt applies only to shares in the investor's personal company and is taxed at 18%

Explanation

Investors' relief applies to newly issued shares in an unlisted trading company that the investor subscribed for and held for the qualifying period, and the investor must not be an employee or officer. The tables give a £1,000,000 lifetime limit and a 14% rate. Open market purchases do not qualify.

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