Business investment relief ― qualifying investments

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Business investment relief ― qualifying investments
  • Qualifying investment
  • Who can make the qualifying investment?
  • Deadline for making the investment
  • Anti-avoidance
  • Advance assurance facility
  • Claim
  • Clawback of remittance exemption

Individuals who are not domiciled or deemed domiciled in the UK can bring foreign income and capital gains into the UK for the purposes of investment in UK companies without triggering a remittance. This is known as ‘business investment relief’. For more on the remittance basis, see the Remittance basis ― overview guidance note.

To be a qualifying investment, the company must be a private limited company whose shares are not traded on a recognised stock exchange.

The investment must be made within 45 days of the date the funds are brought into the UK.

There are provisions under which the funds will become a chargeable remittance if there is a 'potentially chargeable event', such as the sale of the shares or if the company ceases to trade. If this event occurs, the taxpayer has a grace period (which varies depending on the type of event) to take the funds out of the UK or reinvest them in another qualifying investment to avoid a remittance.

These provisions apply where the funds are brought into the UK or the investment is made on or after 6 April 2012.

Following a consultation in 2016, changes were introduced to the regime that apply where the funds are brought into the UK or the investment is made on or after 6 April 2017. The changes are designed to increase take-up of the relief and stimulate more investment into the UK. This guidance note has been updated to take account of the revised rules.

Qualifying investment

Foreign income and gains can be brought into the UK without being treated as a remittance provided they are invested in a 'target company'. For the purposes of this exemption, a target company is:

  1. an 'eligible trading company'

  2. an 'eligible stakeholder company'

  3. an ‘eligible hybrid company’ (introduced as part of the 6 April 2017 changes), or

  4. an 'eligible holding company'

ITA 2007, ss 809VC, 809VD(1)

An 'eligible trading company' is a private limited company which carries on one or more commercial

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