Other Tax Credits and Incentives

Investing in business

Relief for Disposal of Business Assets

Reduced capital gains tax:

• 14% (formerly 10%) through April 2026.
• Lifetime limit of £1 million per person.

Applicable to:

• Shares in personal companies (min. 5% participation).
• EMI (Business Management Incentive) actions.

Requirements: participation for 2 years before the sale.

Real Estate Relief

Inheritance Tax exemption up to 100%. It applies to active companies, not investment activities. Since April 2026:

• First £1 million: 100% deduction.
• Excess: 50% reduction.

Unlisted shares (such as AIM): deduction reduced to 50%.

Agricultural Tax Relief

Reduction of the IHT on agricultural land and related assets. Requires ownership during:

• 2 years if the landlord uses the land.
• 7 years if someone else uses it for agricultural purposes.

Certain assets (e.g. abandoned buildings) don't qualify.

Relief for Investors

• Reduced rate of 14% on profits (formerly 10%).
• Lifetime limit of £1 million (up to £10M if disposed of before 30/10/24).
• It requires holding unlisted shares for 3 years.
• For external investors only (not employees or directors).

Relief for Business Investment

• It applies to people not domiciled in the UK using the remittance base.
• It allows you to invest without taxing the money remitted.
• Only valid until April 5, 2028.
• Investment in private commercial companies or their holding companies.
• It requires strict prior planning.

Business Investment Plan

• 30% income tax relief (up to £1M/year or £2M in KIC).
• Capital Gains Tax exemption if shares are held for 3 years.
• Capital Gains Tax Deferral if profits are reinvested in shares of the business investment plan.
• Inheritance and Gift Tax: shares held for 2 years can receive full exemption under Commercial Property Tax.
• Only valid if the investor is not linked to the company (max. 30% ownership, not employee/partner/director in general).

Venture Capital Funds

• 30% income tax relief.
• Capital Gains Tax and dividend tax exemption (up to £200,000/year).
• They offer diversification when investing in multiple companies.
• Limitations: Funds should be used for business expansion, not to buy other companies.