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Entrepreneurs’ relief: HMRC relents on changes

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Changes in the Budget restricting entrepreneurs’ relief to individuals holding shares entitling them to at least 5% of distributions were widely criticised as inappropriately denying relief in a number of common situations. HMRC announced just before Christmas an alternative test based on the expected share of proceeds on a notional sale at market value of the entire ordinary share capital of the company. The new test operates alongside the ‘distributions’ test and as an alternative to it and in most cases remedies the defects of the original proposals.

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