Become a non executive director to reduce CGT

If you are planning to make an investment into an unquoted company, you should be considering the capital gains tax position on a future disposal. The rate of CGT is now 18% and this applies to all investors. However if the company is a trading company, the shares are unquoted (or AIM quoted), and the investor is an employee or officer of the company, Entrepreneurs Relief could be available to reduce any gain by 4/9 leading to an effective 10% rate of capital gains tax. This would however only apply to the maximum lifetime gain of £1,000,000. In these circumstances a disposal of the shares is a highly tax efficient method of realising cash in any case, and when compared to other EU states the UK taxes on such corporate investments are very low. Note that being an officer or employee of the company for the purposes of Entrepreneurs Relief should not be a problem as non executive directors ('NED's) count here. Therefore provided the investor is a 'NED' Entrepreneurs Relief could be available so long as they also own >5% of the shares.