Readers’ forum: Will share purchase via option prevent relief applying?

We have a client who has sold an unlisted shareholding which may qualify for investors’ relief. The client is a director and shareholder of a company which loaned money to the company in question. As part of this loan the company received an option to subscribe for shares in the borrower.‌

The client then purchased the option from the company shortly afterwards at market value before exercising it at a later date and subsequently selling for a significant gain which is currently taxable at 20%.

We have wracked our brains and we are unsure if the shares being purchased via an option prevents one or more of the criteria for investors’ relief as listed in TCGA 1992 Chapter 5 Part V being met?

Query 20 292 – Year of the Dragon.

Carefully consider the anti-avoidance provisions.

Much like business asset disposal relief (BADR) investor’s...