Trio of changes to Entrepreneurs' Relief

Posted on 29 March 2016

Trio of changes to Entrepreneurs' Relief

The Government announced three changes to the rules regarding entrepreneurs' relief. The first of these will allow the taxpayer to claim the capital gains tax relief where they make certain disposals of privately-held assets when there is an accompanying disposal of business assets to a family member. It should enable the relief to be claimed where the disposal of business assets do not meet the present 5% minimum size condition.

The second change, termed 'investors' relief', will allow Entrepreneurs' Relief to be claimed on the disposal of certain qualifying shares in an unlisted trading company, even where the shareholder is not an employee or officer of the company. The shares will need to have been newly issued on or after 17 March 2016 and must have been held for at least three years starting from 6 April 2016. The third and final change relates to joint ventures and partnerships and will enable companies to claim entrepreneurs' relief where they invest in a trading business that is not part of the same group. Further, the activities of a corporate partner in a firm will be treated as having their true nature (i.e. trading or non-trading) when determining if the company is a trading company.

The announcements represent successive Governments' continued support of Entrepreneurs' Relief. The changes are welcomed, but the devil is always in the detail and care should always be taken to ensure that you are within the strict conditions of the relief to reduce your capital gains tax liability.

For further information, please contact Kassim Meghjee.

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