The Changes to Entrepreneurs’ Relief


Last October’s delivery of the Budget highlighted that harsher criteria would be introduced for those looking to apply for Entrepreneurs’ Relief. So, what does this mean for Entrepreneur’s who are considering selling their business?

Qualifying conditions have been tightened in a bid to reduce the exploitation of the relief. We all know that starting a new business is no mean feat and it doesn’t always go to plan. Hence the need for Entrepreneur’s Relief.

Whether it’s due to a lack of time, results or funds, Entrepreneurs may wish to look at selling or giving away part of their business whilst being able to do so at a reduced tax rate via Entrepreneurs’ Relief.

Prior to the changes in the Budget, Entrepreneurs looking to sell were required to have owned their shares in the company for one year. This is rising to a minimum of two years before being eligible to qualify for the relief.

There are changes in the requirements in company stakes, with the individual being required to hold;

– A minimum of 5% of voting rights

– At least 5% of distributable profits

– A minimum share of 5% of the company’s net assets

– A minimum of 5% of the ordinary share capital

It might not be one of the most attractive tax benefits. However, it’s been amended to encourage Entrepreneur’s to plan ahead for the future sale of their business.

Find out more about how Uscita can assist during a business sale, please contact us here in strictest confidence.

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