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ACCA Strategic Professional · Advanced Taxation (UK) · Investment and other expenditure that reduces tax liabilities

Which statement about Investors' Relief is correct for a person subscribing for shares in an unlisted trading company?

Investors' relief taxes qualifying gains at 14% and has its own £1,000,000 lifetime limit, separate from the limit for business asset disposal relief. It is not available on any shares bought in the market.

  1. ARelief applies to a gain on any shares bought on the stock market, taxed at 14%
  2. BGains qualifying are taxed at 14% subject to a separate £1,000,000 lifetime limitCorrect
  3. CRelief shares the single £1,000,000 lifetime limit with Business Asset Disposal Relief
  4. DGains qualifying are taxed at 18% regardless of the investor's taxable income

Explanation

The tables give investors' relief its own £1,000,000 lifetime limit and a 14% rate, separate from the limit for business asset disposal relief. Therefore the limits are not shared. The relief is for qualifying subscribed shares, not shares bought on the market, and the rate is not tied to 18%.

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