Entrepreneurs’ Relief reduces the rate of CGT to 10% on the first £10 million of gains on the disposal of qualifying business assets.
This includes sole traders disposing of their business and partners disposing of their interest in a partnership carrying on a business.
With many businesses operating as limited companies these days, it is important to appreciate that not all shareholdings qualify for this generous relief.
Shareholdings qualify for Entrepreneurs’ Relief provided:
All of these conditions must be satisfied throughout the twelve months up to the date of disposal.
A couple of recent tax tribunal cases have considered the 5% test and the HMRC view is that most shares except for certain preference shares need to be considered. Always think about this first when considering issuing additional shares in your company as it may have a detrimental effect on other shareholders’ entitlement to CGT Entrepreneurs’ Relief.
For more information or assistance, contact www.exceeduk.co.uk.