The disposal of an unincorporated business, or of shares in an unquoted trading company, as well as assets used in such a business or company, can give rise to capital gains tax (CGT) at 18% or 28% of any gain realised depending on the seller’s marginal rate of income tax and subject to any annual exemption which may be available. The amount of CGT payable may be mitigated by Entrepreneur’s Relief (ER) in appropriate cases. Where available, ER reduces the rate of CGT to 10% on the first £10 million of gains. A disposal may arise on sale, gift or on liquidation of a company.
Where the interest is in shares in an unquoted trading company, the individual must have owned at least 5% of the shares either:
The Finance Act 2015 introduces two restrictions to ER:
HMRC did not approve of such arrangements and as a result of Finance Act 2015 changes, ER will no longer be available in such circumstances unless the feeder company is trading in its own right.
Clients who may be affected by these changes are recommended to contact their relevant partner
The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice. No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction.