PT54 Business Investment Relief

Question 1

‘Business investment relief’ encourages non-domiciled individuals to bring money to the UK for investment in commercial businesses.

Where a ‘qualifying investment’ is made, foreign income or gains brought to the UK to make that investment are remitted tax free.

A ‘qualifying investment’ is …….

Answer 1

an acquisition of shares or securities in an unlisted trading company or a loan to such a company.

Question 2

How long do you have to make the investment after you bring the funds to the UK?

Answer 2

The investment must be made within the 45 days beginning with the remittance of funds to the UK.

Question 3

No relief is available if the investor…..

Answer 3

obtains an ‘abnormal’ benefit related to the investment.
.

Question 4

Foreign income and gains used to make a qualifying investment will become taxable if:

Answer 4

• a ‘potentially chargeable event’ occurs; and
• the ‘appropriate mitigation steps’ are not taken within the grace period.

There is no remittance if ‘appropriate mitigation steps’ are taken within the ‘grace period’.

‘Appropriate mitigation steps’ are taking the whole of the proceeds offshore or reinvesting the whole of the proceeds in another qualifying investment

Question 5

How long is The ‘grace period’ ?

Answer 5

normally the 45 days beginning with the day the proceeds are made available.

Question 6

For planning purposes, what income should you remit to the UK for business investment relief?

Answer 6

it is recommended that remittances which qualify for business
investment relief are made from foreign income. Where money is brought to the UK from a ‘mixed fund’ and is used for a qualifying investment, the investment will comprise of a
proportionate amount of the income and gains in the mixed fund immediately before the transfer.

Question 7

Where exempt property is sold…..

Answer 7

the foreign income and gains with which the property was purchased are treated as having been remitted to the UK.

Sales of exempt property will not give rise to a taxable remittance, provided that the whole of the proceeds are taken offshore or used to make a qualifying investment within
the 45 days beginning with the date the proceeds are released.

Question 8

Can you get both EIS & business investment relief?

Answer 8

If the ‘target company’ is a company which has EIS status, a subscription for shares in that company will qualify for EIS (or S EIS) relief.