ENTREPRENEUR’S RELIEF – CHANGES TO QUALIFYING CONDITIONS

ENTREPRENEUR’S RELIEF – CHANGES TO QUALIFYING CONDITIONS


Entrepreneurs’ Relief is a valuable relief that can mean an individual pays Capital Gains Tax on the disposal of shares in their company at 10%, rather than the standard rate of 20%.

Your Tax Shop can confirm two significant changes to the conditions which need to be meet to claim Entrepreneurs relief where announced in the budget this year.

The first change involved the definition of a personal company for Entrepreneurs’ Relief.

Under the old rules a personal company was defined as one in which the shareholder:

  • is an office holder, director or employee of the company or group company; and
  • holds at least 5% of the ordinary share capital and of the voting rights of the company.

Following the changes, Your Tax Shop, can advise that shareholder will now also need to hold a 5% interest in both the distributable profits and the net assets of the company for the relief to be available.

Please note that the above changes will apply to disposals on or after 29 October 2018 and therefore, the new conditions will need to have been met for a period of 12 months leading up the disposal.

The second change is the minimum period throughout which certain qualifying conditions must be met.

From 6 April 2019 the holding period is extended from 12 to 24 months.

This change will apply to disposals made on or after 6 April 2019.

For further information please contact one of the team here at Your Tax Shop based in Ashton town centre on 0161 3395689.