Bespoke Tax Accountants

Specialist tax advice, accountancy and tax returns

01242 505970
info@bespoketax.com

  • Home
  • About Us
    • Meet The Team
    • Careers
    • Statutory Information
    • Privacy Policy
  • Who We Help
    • Personal and Family
    • Business
    • Our Clients
  • News
    • Making Tax Digital
  • Giving Back
  • Contact
  • Cloud Accounting
    • Xero

Entrepreneurs’ relief changes

7th November 2018 By bespoketax

Entrepreneurs’ relief changes

In the Budget, the Chancellor, Philip Hammond announced two changes to the way Entrepreneurs’ Relief (ER) will operate. ER applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where this relief is available Capital Gains Tax (CGT) of 10% is payable in place of the standard rate. CGT on the disposal of chargeable assets is usually chargeable at 20%. There are a number of qualifying conditions that must be met in order to qualify for ER.

The first change came in with immediate effect on 29 October 2018 with the introduction of two new tests to the definition of a personal company for ER. These tests require the claimant to have a 5% interest in both the distributable profits and the net assets of the company in order to qualify for ER. The new tests must be met, in addition to the existing tests, throughout the specified period in order for relief to be due.

The second change increases the minimum period during which certain conditions must be met to qualify for ER from one to two years. This measure will have effect for disposals on or after 6 April 2019, unless a business ceased operating before 29 October 2018. This measure will ensure that taxpayers looking to claim ER will be required to have a longer term interest in their business for an extended period of time.

These changes will affect a significant number of taxpayers looking to claim ER especially those involved with a business over a short-term period. However, there had been suggestions that ER could have been abolished completely, which would have had a far wider impact on investors.

Whilst the draft legislation is unclear on the definitions for the new tests, it is hoped that the wording of the legislation will be improved, and that HMRC will issue guidance on how the new tests will work in practice.  Bespoke will be contacting clients who could be affected by the changes in due course. 

Filed Under: Capital Gains Tax

Entrepreneurs’ relief changes

7th November 2018 By bespoketax

Entrepreneurs’ relief changes

In the Budget, the Chancellor, Philip Hammond announced two changes to the way Entrepreneurs’ Relief (ER) will operate. ER applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where this relief is available Capital Gains Tax (CGT) of 10% is payable in place of the standard rate. CGT on the disposal of chargeable assets is usually chargeable at 20%. There are a number of qualifying conditions that must be met in order to qualify for ER.

The first change came in with immediate effect on 29 October 2018 with the introduction of two new tests to the definition of a personal company for ER. These tests require the claimant to have a 5% interest in both the distributable profits and the net assets of the company in order to qualify for ER. The new tests must be met, in addition to the existing tests, throughout the specified period in order for relief to be due.

The second change increases the minimum period during which certain conditions must be met to qualify for ER from one to two years. This measure will have effect for disposals on or after 6 April 2019, unless a business ceased operating before 29 October 2018. This measure will ensure that taxpayers looking to claim ER will be required to have a longer term interest in their business for an extended period of time.

These changes will affect a significant number of taxpayers looking to claim ER especially those involved with a business over a short-term period. However, there had been suggestions that ER could have been abolished completely, which would have had a far wider impact on investors.

Whilst the draft legislation is unclear on the definitions for the new tests, it is hoped that the wording of the legislation will be improved, and that HMRC will issue guidance on how the new tests will work in practice.  Bespoke will be contacting clients who could be affected by the changes in due course. 

Filed Under: Uncategorised

Recent News

  • CGT during divorce or separation
  • Taxpayers who return to the UK
  • Corporation Tax – marginal relief from 1 April 2023
  • Claiming Child Trust Fund cash

News Categories

  • Budget Summary
  • Business
  • Business Support
  • Capital allowances
  • Capital Gains Tax
  • Company Secretarial
  • Construction Industry Scheme
  • Corporate Governance & Regulation
  • Corporation Tax
  • Customs Duties
  • Duties
  • Employee Benefits
  • Employment & Payroll
  • Employment Law
  • European Union
  • Family Tax Credits
  • General
  • HMRC notices
  • Income Tax
  • Inheritance Tax
  • National Insurance
  • NIC & Pensions
  • Other duties
  • Overseas personal tax issues
  • Overseas tax issues
  • Payroll
  • Pension
  • Personal
  • Practice News
  • Stamp duty
  • Stamp Duty Land Tax
  • Tax credits
  • Tax Diary
  • Value Added Tax
  • VAT & Duties

About Us

Bespoke has a reputation for helping our clients make the most of their financial situations and in turn we have become a trusted extension of their business or family.

Bespoke assist with compliance requirements, providing specialist tax advice, and planning for now and the future.

Keep informed.
Sign up for our Topical Newsletter

Our FREE monthly newsletter will keep you up to date with the latest news related to the world of accountancy.

Register Here

Contact

Delta Place,
27 Bath Road, Cheltenham,
Gloucestershire, GL53 7TH
01242 505970
info@bespoketax.com

ICAEW Chartered AccountantsXERO Gold PartnerChartered Institute of TaxationMember of EISA

Copyright © 2022 · Bespoke Tax Accountants · Website by Culpepper & Co

.