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FA 2019: entrepreneurs’ relief

This year’s Act introduced a number of changes relating to entrepreneur’s relief (ER). While concerns that the relief might be abolished in its entirety to eliminate its estimated £2.7bn cost to the Treasury were ill founded the changes are likely to have a substantial impact.

Personal company requirements

A major amendment has seen the requirement for the person claiming the relief to have a minimum 5% interest in the share capital of company extended from applying only to voting power and nominal value to encompass a requirement for the individual to be entitled to receive either:
  • 5% of the dividends and assets available to ‘equity holders’ on a winding up of the business; or
  • 5% of the sale proceeds due to holders of ordinary shares on a notional disposal of the company.

The second qualifying test was introduced at a late stage in order to simplify the determination of whether relief is available. In...

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