Entrepreneurs’ Relief – a welcomed tax relief for shareholders in the South

Proposed changes to the Entrepreneurs’ Relief are to be welcomed and will bring a boost to growth enterprises across the South, says HWB Director David Brookes.

Following an announcement in the Spring Statement, HMRC is consulting on amending the rules around entrepreneurs’ tax relief. It follows a trend of entrepreneurs missing out on the tax relief if they issue new shares in a company, and in doing so, taking their total shareholding in the company below 5%. A shareholding of less than 5% does not qualify for the tax relief under the existing rules.

Under the proposed changes, investors would be able to trigger the tax relief immediately prior to their issuing of new shares, and defer the tax until a later date, when they sell some of their own shares.

Entrepreneurs’ Relief reduces the amount of Capital Gains Tax on a disposal of qualifying business assets on or after 6 April 2008, as long as you have met the qualifying conditions.

David Brookes, who specialises in working with SMEs across Hampshire, Dorset and Wiltshire, said: “The present rules have been unchanged since 2011 and, while beneficial to many individuals, they often do not work in favour of business founders wanting to grow and issue more shares.

“This consultation will be broadly welcomed by SME and start-up owners as it seeks to protect their interests. If ratified, this long-standing problem for shareholders will be solved and that can only be good for business in the South.”

For more details about Entrepreneurs’ Relief and whether you qualify contact David Brookes on 023 8046 1201