Chancellor protects ER but with beefed up requirements

Mon 29 Oct 2018

The Chancellor sees the importance of encouraging entrepreneurship and has decided to retain Entrepreneurs relief, albeit with some restrictions

ER is a generous relief allowing up to £10m of capital gains per person to be taxed at only 10%. It has always had the attraction of being a straightforward relief with the main qualification criteria being that the asset was owned for 12 months. Such a short period does not naturally align with the vision of patient capital and has been extended to 2 years.

In a further measure, ER qualification conditions for shares have always been very limited and potentially open to manipulation. Further conditions have been introduced regarding rights to capital and income which bring the qualification criteria more in line with the intention of the relief.

These measures should have little impact on patient entrepreneurs but forward planning becomes even more important to ensure valuable reliefs are not lost. However, for employee shareholdings more detailed planning may be required.

Please contact Andrew Westhead if you require assistance in this area.

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