UK Capital gains tax (CGT)
CGT business asset taper relief
Taper relief was introduced in 1998 and applies to individual investors and trustees (it does not apply to corporate investors). The relief reduces a chargeable gain assessable to CGT in relation to the period the investment is held, and the scales of relief depend upon whether the investment is a ‘business’ or ‘non-business’ asset.
Shares in qualifying AIM AND PLUScompanies are classed as ‘business’ assets, which attract significantly higher rates of taper relief – these can reduce the effective rate of tax to 10 per cent for a higher rate taxpayer after a holding period of two years.
Taper relief reduces the gains made on sales of shares or securities, according to the length of the period of ownership. Unlike other reliefs, eg EIS, it does not matter if they are subscribed for in new issues or purchased in the market.
- The period of ownership in between the exact dates of acquisition and disposal.
- Only the last ten years of ownership are taken into account.
- Capital losses are effectively tapered, because they are set off against gains before taper relief is applied.