Further Changes to Entrepreneurs Relief

The draft legislation implementing the Autumn 2018 Budget changes to the conditions required for Entrepreneurs Relief (‘ER’)  has been amended so that either or both of the following conditions need to be met for an individual to claim ER:

(i) by virtue of that holding, the individual is beneficially entitled to at least 5% of the profits available for distribution to equity holders and, on a winding up, would be beneficially entitled to at least 5% of assets so available, or

(ii) in the event of a disposal of the whole of the ordinary share capital of the company, the individual would be beneficially entitled to at least 5% of the proceeds.

This second part to the new test means that a shareholder who receives at least 5% of the proceeds can qualify for ER, even if they have not received equal dividends. On the face of it this addresses many of the concerns raised about the impact of the changes on different share classes.

If you have any further questions about the changes then please do not hesitate to contact a member of Rooks Rider Solicitors’ Wealth Planning team who will be happy to assist.

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