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Finance Act changes for Entrepreneurs’ Relief

August 18, 2015 | Financial Saviour

Just when we thought the ins and outs of Entrepreneurs’ Relief and its qualifying conditions couldn’t spiral into any further technicalities, changes have been introduced in the Finance Act 2015.

All legislation concerning taxes and reliefs are included within the Finance Act, which is released at least once a year to coincide with any updates outlining the main tax rates for each financial year.

The latest edition saw changes that restricts the availability of Entrepreneurs’ Relief in three certain situations. These include:

Associated disposals

For disposals made on, or after, 18th March 2015, an individual will need to dispose of an interest of at least 5% to satisfy a withdrawal condition in order for it to qualify as an associated disposal. It’s worth noting too that the involvement, or presence, of people connected to this disposal, including relatives, can disqualify a claim for Entrepreneurs’ Relief, even though a disposal of 5% interest is made.

Exclusion of goodwill in certain circumstances

For disposals made on, or after, 3rd December 2014, no Entrepreneurs’ Relief is granted if the relevant asset that otherwise qualifies for the relief is goodwill, and the transfer is to a close company with the individual responsible for the transfer in some way connected to the recipient company. There is, however, a limited exception for retiring partners, and related party relationships can be present where family members control, or have a major interest in, the company.

Trading company

For share disposals made on, or after, 18th March 2015, Entrepreneurs’ Relief is not available if the shareholding is held through a joint venture company, unless this company is a registered trading company in its own right. In this situation, a company would not be classed as a trading company in its own right if that condition is only met by reference to the joint venture provisions.

If you’re unsure whether you or your business are affected by these changes to the qualifying conditions for Entrepreneurs’ Relief, or for more information on either, please get in touch with Financial Saviour today. We understand that all the jargon can sometimes cause confusion about your situation, so we always adopt a friendly and proactive approach alongside providing expert financial advice.

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