ENTREPRENEURS RELIEF
How will the changes announced in the March 2015 Budget affect you?
In the March 2015 Budget the Chancellor announced two changes to the valuable Capital Gains Tax (CGT) relief “Entrepreneurs Relief”. Entrepreneurs Relief means that gains that meet the qualifying conditions for the Relief are only subject to CGT at 10% as opposed to the normal rates of CGT of 18% or 28%.
The first change that was announced affects individuals who do not hold 5% or more shares directly in a company that is not a trading company in its own right. Previously a company could be regarded as a trading company if it had an interest in a qualifying joint venture or was a partner in a partnership or limited liability partnership (LLP) providing the joint venture company or partnership was trading in its own right. With effect from 18 March 2015 the definitions of a ‘trading company’ and ‘holding company of a trading group’ do not take account of activities carried on by joint venture companies or of partnerships of which the company is a member.
Therefore the company in question would need to have a significant trade of its own in order to be considered a trading company to qualify for Entrepreneurs Relief and the 10% tax rate. The second change relates to individuals that own an asset personally for example a property that is used in a business.
