Entrepreneurs’ relief

Entrepreneurs’ relief is the single most important tax relief available to individuals disposing of business assets. When applied, it reduces the capital gains tax rate to 10%. With our advice you can make sure you and others in your business qualify for this valuable tax break.

The relief is available on up to £10 million of lifetime gains, making it worth £1-£1.8 million in tax savings. It must be claimed on or before the first anniversary of 31^st January following the tax year of the disposal.

It is important to begin your tax planning at least one year before a proposed sale so you can get the most value out of entrepreneurs’ relief when disposing of an asset. WMT tax advisers will work alongside you to structure your business or transaction, so that they qualify for maximum tax relief.

Entrepreneurs’ relief has many conditions to satisfy and pitfalls to avoid that are best addressed with specialist advice.

Entrepreneurs’ relief is available on disposals of:

• the whole or a part of a business
• assets in use when the business ceases
• assets owned by you and used by the business – ‘associated asset disposal’
• shares or securities in a trading company

Each of these types of disposal requires you to meet a particular set of conditions which may include:

• type of business
• type of shares and the proportion of the total qualifying shares you hold
• length of time you have held your shares
• your role in the business
• the length of time you have worked in the business

To get the most benefit out of your tax situation, entrepreneurs’ relief should be considered in the overall context of the disposal of your business or sale of business assets. Business consulting advice can improve the appeal of your business to buyers whilst remuneration planning and thorough preparation of your personal tax return can offer further personal tax savings.

Get in touch with our tax team to find out more about how we can help you.