Ways Entrepreneurs’ Relief can catch you out
So you’re a business owner looking to sell assets; you own at least 5% of the shares of a trading organisation or have lent the proposed disposable assets to the business or a personal company – all good for Entrepreneurs’ Relief? Not quite, and it’s worth finding out why.
There are some very particular details involved when applying for Entrepreneurs’ Relief and you want to ensure that you have them all covered so not to end up disappointed, especially if you have been planning for the situation for a while.
Some of the most common circumstances are as follows:
Owning the right shares
Even if you own more than the required minimum of 5% of shares in a particular business, you will not be entitled to Entrepreneurs’ Relief if these shares are not qualifying assets. Non-voting shares are regularly mistaken for the precise assets required for Entrepreneurs’ Relief, so ensure you own the correct type of shares when filling out an application.
Active at the business
Following on and sometimes even the right type and amount of shares isn’t enough to qualify for Entrepreneurs’ Relief if you are retired or have moved to work for a different business. The rules state that even though you don’t need to be a director at the business disposing of the assets in question, you still need to be active there in some way for your share of the profit not to be taxed.
Qualified trading company
There have been so many instances where an individual who is active at the business and owns the required type and amount of business shares, an otherwise ideal candidate for Entrepreneurs’ Relief, has been let down simply because the business is not a qualified trading company. This, however, can be discussed with HMRC as solutions are available.
For help and advice weaving your way through the maze that is Entrepreneurs’ Relief, get in touch today and the team at Financial Saviour will work to ensure the best solution for you. Fill out our enquiry form for a full assessment of your situation.