Autumn Budget 2017: Capital Gains Tax – Entrepreneurs’ relief

Entrepreneurs’ relief (“ER”) is due on a material disposal of assets which includes a qualifying disposal of shares or securities in a trading company. One of the conditions to qualify for ER is that the shareholder must have held 5% of the ordinary shares and votes for a period of 12 months before a sale or cessation of trade, followed by a sale.

The Government will consult in Spring 2018 on how access to the relief might be given to entrepreneurs whose holding in their company is reduced below the normal 5% qualifying level as a result of raising funds for commercial purposes by means of issues of new shares.

Further detail is needed on how this may be enacted, but for those entrepreneurs where raising finance is key to the success of the business which inadvertently dilutes their shareholding below the 5% threshold for ER, this will be welcome news.