Entrepreneurs’ Relief: Tax relief for the disposal of shares and assets

If Entrepreneurs’ Relief is available on the disposal of shares or assets any gains made will only be subject to capital gains tax at 10% (as opposed to 18% or 28%) up to the lifetime limit of £10m.

There are conditions that must be satisfied if a vendor of a business, business assets or shares is to be entitled to claim Entrepreneurs relief. The conditions for such disposals are all slightly different.

A vendor of shares wanting to claim Entrepreneurs Relief must throughout the period of one year ending with the date of disposal of the shares be an employee or director of the relevant company (or if the company is a member of a trading group of one or more companies which are members of the trading group), and hold at least 5% of the ordinary share capital and exercise at least 5% of the voting rights of the relevant company. The company in question must throughout the period of one year ending with the date of disposal of the shares also be a trading company or the holding company of a trading group.

For any companies that have ceased trading before the relevant disposal Entrepreneur's Relief will still be available provided certain conditions are satisfied.

Entrepreneurs Relief will not be available on the disposal of businesses that carrying on mainly investment business or on the disposal of business assets that are held as investments.

How do I claim Entrepreneur's Relief?

ER must be claimed in a self-assessment tax return and the claim must be made on or before the first anniversary of 31 January after the tax year of disposal. So for example, if the disposal occurs in the 2014/2015 tax year, Entrepreneur's Relief must be claimed by 31 January 2017.

We can advise you on any Entrepreneur's Relief queries you have and can deliver this advice on a fixed fee basis.

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