What qualifies for 10% Entrepreneurs’ Relief?

Source: HM Revenue & Customs | | 10/08/2017

Entrepreneurs' Relief applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where Entrepreneurs' Relief is available CGT of 10% is payable rather than the normal main rate of 20%. This can significantly reduce the amount of CGT due.

When the relief was first introduced there was a lifetime limit of £1 million for gains. This was increased to £2 million from 6 April 2010, to £5 million from 23 June 2010 and to a generous £10 million from 6 April 2011.

The relief is available to individuals as well as to some trustees of settlements. To qualify, the individual should be either an officer or employee of the company, own at least 5% of the company and have at least 5% of the voting rights. There are also other qualifying conditions that must be met.

Entrepreneurs' Relief is not available to companies or personal representatives of deceased persons or in relation to a trust where the entire trust is a discretionary settlement. The limit applies to all qualifying gains, whatever the year in which they arose.

 

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