Corporate Tax & Incentives

Our Entrepreneur’s Relief (ER) series of seminars and updates have highlighted the importance of getting the ownership of your company in order before you consider selling. Knowing that you and other shareholders qualify for ER, including valued employees who hold minority shareholdings, means peace of mind should someone want to buy, whether it is a planned sale or an unexpected offer.

This valuable relief reduces the rate of tax to 10% on gains of up to a lifetime limit of £10 million and is designed to benefit those who create and develop economic growth. However all too often issues jeopardising the availability of ER are only identified when advising on an imminent disposal. This is frequently too late to remedy the problem and can be a costly mistake.

The availability of ER hinges on satisfying many of the relevant conditions for at least 12 months before a disposal, so time is of the essence. This may be even more relevant than ever. There are concerns amongst some tax practitioners that ER in its current form, could be amended depending on how the political wind blows.

In the Treasury’s consultation document “Financing Growth in Innovative Firms”, published in August 2017, it states that HMRC are “undertaking quantitative research to further understand the impact on behaviour of Entrepreneurs’ Relief”. The fact that ER is coming under scrutiny itself adds to uncertainty. If, following the research, HMRC concludes that the relief is being abused by some taxpayers then what amendments would be made to combat such perceived abuse?

If you are assuming that ER will be available, you should seek advice to confirm this is the case and, if not, give yourself the time to make necessary changes.

If you are considering a sale or retirement then you should consider doing so, sooner rather than later, particularly if you are assuming ER, in its current form, is available. Download our Entrepreneurs’ Relief Handy Guide, and speak to us for more information.

Heather Gibson

Associate at Brodies LLP
Heather is an Associate in the Corporate Tax Team. She has a broad corporate practice which includes acquisitions, investments and reorganisations of companies, VAT, SDLT/ LBTT implications of property investments and worker/ employee matters ranging from incentives and termination issues to IR35 and CIS.
Heather Gibson

Latest posts by Heather Gibson (see all)