ACCA Strategic Professional · Advanced Taxation (UK) · Investment and other expenditure that reduces tax liabilities
Which one of the following investors would be able to claim investors' relief on a disposal of shares?
Omar qualifies. Investors' relief requires new shares subscribed for in cash in an unlisted trading company, held for the minimum period by an outside investor who is not an officer or employee. Purchased shares, director shareholdings and main-market listed shares do not qualify.
- AOmar subscribed for new ordinary shares for cash in an unquoted trading company and has held them for three years. He has never been an employee or officer of the companyCorrect
- BNadia bought ordinary shares in an unquoted trading company from an existing shareholder and has held them for four years
- CHugh subscribed for new shares in an unquoted trading company and is also a paid director of that company
- DLena subscribed for new shares in a company listed on the main market of the London Stock Exchange and has held them for five years
Explanation
Investors' relief is aimed at external investors who subscribe for new shares for cash in an unlisted trading company and hold them for the required period without being connected through office or employment. Nadia's shares were not newly issued to her. Hugh is a paid director, so he is not an outside investor. Lena's company is listed on the main market, so it is not an unlisted company.
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