Investors’ relief is a capital gains tax (CGT) relief that is available on the disposal of shares where certain conditions are met. If successfully claimed, CGT is charged on qualifying gains at the rate of 10%. ICAEW explained how the relief works and the conditions in a recent article. 

HMRC has identified a number of taxpayers who claimed investors’ relief in their 2023/24 income tax self assessment return where it is unclear if the claim is valid. The taxpayer will receive one of two letters depending on their circumstances. 

In the first letter, HMRC asks the taxpayer to check that they meet the conditions for claiming investors’ relief. If the taxpayer finds that their claim is incorrect, they should amend their return. If the claim is correct, they should contact HMRC using the details given in the letter.  

In the second letter, HMRC informs the taxpayer that they have not provided enough information in their return about the claim. This means that HMRC cannot accept the claim. The taxpayer should either amend their return and remove the claim or contact HMRC to provide more information about the disposal. The letter sets out the information required by HMRC.   

The taxpayer should act within 30 days of the date of the letter otherwise HMRC will consider further action, including amending the return or opening a compliance check. 

The letters explain that interest and penalties will be charged on any underpaid CGT. It is also made clear that any action taken by the taxpayer after receiving the letter will be treated as a prompted disclosure by HMRC for the purposes of calculating penalties.   

Further information 

• Investors' Relief 2024 (HS308) - GOV.UK