Could you qualify for Entrepreneur Tax Relief?

If you are thinking about closing down your company, you may be able to claim tax relief from Capital Gains Tax. This means that instead of paying 20% CGT (or 32.5% or possibly 38.1% dividend rate for an additional rate tax payer) you could be paying 10% (this is a flat rate, regardless of whether you are a basic, higher or additional rate taxpayer).

There are a few criteria you have to meet in order to qualify for this relief (you must either be selling all or part of the business, or selling shares if you have at least 5% of shares and voting rights, or selling shares you got through and EMI scheme, or selling assets you lent to the business). As a result, in most in cases, entrepreneurs’ relief will be available to:

  • Sole traders and partners selling the whole or part of your business (including funished holiday lettings)
  • Company directors and employees who sell a “material stake” in a company (a material stake means the shareholder works for the company and can exercise at least 5% of voting rights)
  • Company directors and employees who acquired shares under the EMI option scheme

If you think any of the above apply to you, get in touch with us and will be happy to discuss whether you can apply for Entrepreneur Tax Relief as well as assist you through the process if required.

Source: HM Revenue & Customs | 05-09-2018