Information on Entrepreneurs' Relief

Some key points to remember about Entrepreneurs’ Relief:

  • Available to individuals rather than companies, especially if you are a sole trader or are an owner of, or shareholder in, a trading business.
  • Capital Gains Tax only taxes the profit made from an asset disposal, not the entire amount received for the asset in question.
  • Assets can be tax-free anyway and an individual will not have to pay Capital Gains Tax if all gains in a year are under their tax-free allowance.
  • An asset can be disposed of through selling, exchanging, giving away as a gift or obtaining compensation if lost or destroyed.

How do you qualify for Entrepreneurs’ Relief?

Quite simply, you must satisfy one of the conditions outlined by HMRC and each of these has its own set of criteria:

Firstly, you will qualify if you dispose of all or part of a business in which you: are a sole trader or business partner, have owned for at least one year before the date of disposal, or have had the business assets disposed of within three years of the business being sold or closed.

You will also qualify for Entrepreneurs’ Relief if you are disposing of shares in a company that you own at least 5% of and are an employee or director. Further criteria for this particular condition states that trading must be one of the company’s main business endeavours.

Finally, you will qualify through disposing of assets lent to your business or personal company if you: have sold your part of the business partnership or shares in a personal company, or owned the assets in question, but allowed your business or company to use them for at least one year up to the date that this business or these shares were sold.

What is Entrepreneurs’ Relief?

It’s no secret that everybody wants to try and save on their tax payments and that is exactly what Entrepreneurs’ Relief strives to do for those in full or part control of the assets belonging to a business or the business itself.

The plan was to set up a system that provides people with an incentive to set up and grow their own businesses by allowing reductions on the Capital Gains Tax that comes into play with business disposals.

Essentially, this means that for those who successfully qualify for Entrepreneurs’ Relief, the profit that has amounted from the disposal of their assets is taxed at a reduced rate of 10% rather than the standard rate of 10% or the higher rate of 28%.

What’s more, because Entrepreneurs’ Relief is a lifetime allowance, there is no limit on how many times you can claim. In fact, this has been extended by successive Chancellors in the annual UK budget since the 2008/09 tax year so you can now claim up to £10m of relief during your lifetime.

These claims are made through your self-assessment tax return and must be with HMRC before the annual deadline which is usually 31st January. We have listed deadline dates below to claim by if your business asset was disposed of during either of the last two tax years in the UK:

Tax year – 2013/14
Deadline – 31st January 2016

Tax year – 2014/15
Deadline – 31st January 2017

For more information and help with claims of any nature, contact us today or fill out the Financial Saviour enquiry form and a member of our team will get back to you as we start work on your personal situation.

How can we help?

Here at Financial Saviour, our team have extensive experience in dealing with a number of tax situations so you can be sure we will be able to help with your claim for Entrepreneurs’ Relief.

Whether it is helping assess your eligibility for Entrepreneurs’ Relief or advice on the necessary documents, forms and deadlines, we are happy to assist with any part of the process, especially now with less than a year before the 2016 deadline for business assets disposed during the 2013/14 tax year. We make it our priority to have all our client’s unique Entrepreneurs’ Relief claims sorted months before the relevant deadline so any disruption further down the line can be dealt with promptly and professionally.

That is the working ethos of Financial Saviour so let us help you today. Give us a call, drop us an email or fill out our enquiry form and a member of our team will get back to you.

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