Information and advice about HM Revenue and Customs conditions for Entrepreneurs’ Relief, your eligibility, and how you can claim.
CAPITAL GAINS TAX ENTREPRENEURS' RELIEF: In some cases, claiming Entrepreneurs' Relief makes it possible to reduce the amount of Capital Gains Tax that you pay.
In some cases it can be reduced to 10% on all gains when you dispose of (or sell) qualifying shares, a company, or some of the business assets.
The qualifying conditions for Entrepreneurs' Relief include the disposing of;
Note: A trustee selling assets held in the trust may also qualify.
If you sell all or a part of your business you must be sole trader or business partner and you must have owned the business for a minimum of 12 months before the date that you sell it to qualify for Entrepreneurs Relief.
The same conditions of qualification also apply if you decide to close your business instead. In this case you must also dispose of the business assets within 36 months to qualify for the same relief.
There are two main conditions to follow if you intend to sell your shares in the company and they must both apply for at least 12 months before you selling the shares;
Beside those two stipulations, before you sell your shares, any of these two other conditions must also apply for at least one year;
Note: You can still qualify for Entrepreneurs' Relief if you sell your shares within 3 years even if the company ceases to be a trading company.
Both of these two condition apply if you sell assets that you lent to the business;
The method you use to work out your tax will depend on whether all of your gains are eligible for Entrepreneurs’ Relief.
Note: If you have other gains, the tax you pay on those depends on what Income Tax rate you pay and when you made your gain.
Higher Rate Income Tax Payers
Higher rate Income Tax payers will pay 28% tax on those gains which are made before 6 April 2016 that do not qualify for Entrepreneurs’ Relief. Gains made from 6 April 2016 that do not qualify for Entrepreneurs’ Relief you can expect to pay;
You can use your tax-free allowance against the gains that would be charged at the highest rates (e.g. where you would pay 28% tax).
Basic Rate Income Tax Payers
Basic rate taxpayers can use these steps to work out the tax rate that you can expect to pay on gains if they do not qualify for Entrepreneurs’ Relief.
Where to get Help - You can contact HM Revenue and Customs or seek professional help from a tax adviser.
The process for claiming Entrepreneurs' Relief on tax return means you can either do it through your Self Assessment tax return or alternatively by filling in Section A of the specific helpsheet.
|Tax year when you sold or closed your business||Deadline to claim Entrepreneurs’ Relief|
|2016 to 2017||31 January 2019|
|2015 to 2016||31 January 2018|
|2014 to 2015||31 January 2017|
Note: Even though there is no limit as to how many times you can claim for Entrepreneurs' Relief, the maximum amount of relief that you can claim during your lifetime is £10 million.
Entrepreneurs' Relief HM Revenue and Customs; UK Rules Updated 2017