Entrepreneurs Week booklet digital - Catalog - Page 38
Spotlight on tax
Structuring
for success
1.
If you are starting a
new business
Entrepreneurs’ Relief (ER)
What does it do?
ER is a long-established relief from capital
gains tax targeted at entrepreneurs who
are involved in the day-to-day running of
their business.
ER reduces the rate of tax charged on a
sale/IPO of a business from 20% to 10% and
it is available for each individual’s first £10
million of qualifying capital gains. There
are several strict conditions which must be
met over a period of time to obtain ER, so it
is important to structure for ER at an early
stage in a business’ life.
Conditions needed for success
• The company is a trading company
(or the holding company of a
trading group)
• The individual holds at least 5% of
the company’s ordinary share capital
and can exercise at least 5% of its
voting rights
• The individual is entitled to 5% of
the proceeds on a sale (or certain other
entitlements)
• The individual is an officer or employee
(full or part time) of the company or group.
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