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Entrepreneurs relief: Minimum qualifying period extension

A new measure increases the minimum period throughout which certain conditions must be met to be eligible for Entrepreneurs Relief from one year to two years.

This measure affects individuals who dispose of all or part of their business, individuals who dispose of shares in their personal company on or after 6 April 2019, and trustees who dispose of trust business assets.

It will have an effect for disposals on or after 6 April 2019, except where a business ceased before 29 October 2018. Where the claimant’s business ceased, or their personal company ceased to be a trading company (or the holding company of a trading group), before 29 October 2018, the existing one-year qualifying period will continue to apply. 

Entrepreneurs Relief: definition of a ‘personal company’

A new measure adds two new tests to the definition of a ‘personal company’.

Both conditions, as well as the existing ‘share capital’ and ‘voting rights’ conditions must be met throughout the specified period. The new conditions require the individual to be beneficially entitled to at least:

• 5% of the company’s distributable profits

• 5% of its assets available for distribution to equity holders in winding up

The measure has an effect for disposals on or after 29 October 2018.

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