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home | Entrepreneurs Relief

Entrepreneurs Relief

how to avoid CGT in 2013/2014

After the changes to the capital gains tax regime after April 2008 Entrepreneurs Relief is now the key tax reduction relief for many business owners.

It can provide for an effective CGT rate of 10% for disposals of businesses, shares and also property in certain circumstances.

There are a number of hoops to jump through in order to claim the relief. In particular you need to ensure that the assets sold are "qualifying assets". You also need to ensure you have owned them for the requisite period of time and that none of restrictions or anti avoidance rules apply. We look at all of this (and more) in our articles.

Entrepreneurs Relief: Free Articles
Entrepreneurs Relief: How it applies - Part I
This report gives a thorough background in how Entrepreneurs Relief operates. . . . keep reading

Entrepreneurs Relief - How to maximise your relief - Part II
In this report we look at how to maximise Entrepreneurs Relief . . . keep reading

Online Entrepreneurs Relief Tool
Online Entrepreneurs Relief ToolOnline Entrepreneurs Relief Tool
Entrepreneurs Relief can reduce the rate of CGT from 28% to 10% on the sale of shares. As the lifetime allowance is now £10 Million this can represent a massive tax saving. This online tool guides you . . . keep reading

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Articles on Entrepreneurs Relief include:

Entrepreneurs Relief and full time working
In this Practitioner Zone article we look at a recent case that decided removing an individual from a company's payroll before a sale of the company didn't end her employment for the purposes of claiming entrepreneur's relief. . . . keep reading
Can i still work after entrepreneurs relief? - USERNAME:MrOrange - 07/10/2014
Tax Question: A director of limited company is looking to perform a members voluntary liquidation where the company has settled all debtors and paid any outstanding tax, so a clean exit. The director is then looking to claim entrepreneurs relief and they do meet all qualifying criteria for the relief, so no issues there. The director of the company would like to continue working immediately after the company is liquidated and ideally start up a new company before the liquidation. The only assets they are looking to transfer is a handful of websites (listed as tangible assets in company financial reports) and domain names (listed as costs in company financial reports). This could be considered a phoenix company and the director would not do this if this was the case. So the question is, what is the best way the director can liquidate the company, claim ER, then continue working without breaking any tax avoidance rules? From research here are some ideas: 1. Claim ER then for 6 months the director can show a genuine break from the same activities to demonstrate that they attempted to change their career path. Then after 6 months the director decides to form a new company and go back to the same activities as their new venture did not suit them for whatever reason. 2. Claim ER then the director works in the same activities but as a sole trader rather than a director of a company. 3. Claim ER then form a new company immediately after or before, doing the same activities but with other shareholders to deem the company not identical to the first. Which of these would be most suitable to avoid any issues and are there any other options available? . . . keep reading
When to claim Entrepreneurs Relief? - USERNAME:MrOrange - 30/09/2014
Tax Question: Last year was profitable for 100% owned limited company so there is now a cash surplus of above 6 figures. From what I have read I could not keep this surplus in the company for the next few years whilst trying to build on the company further, then after a few years liquidate the company and withdraw the business cash at 10% cpital gains tax using Entrepreneurs Relief (ER). I believe HMRC would see the excess been held as not essential for the daily trading activities of the company, thus building up the surplus and withdrawing it using ER would be looked at tax avoidance instead of paying income tax? So my view is I either take out the surplus over the next few years using my personal allowance and using the basic rate tax dividends allowance of ?31,865, so effectively withdrawing around ?42,000 per year, or I have to do ER before April 2015 otherwise the surplus funds could be seen as excessive amounts to be held as they are not needing for regular day to say trading for the company. Am I right in thinking these are the only two options besides investing the surplus which would then turn the company status from a trading company to an investment company? . . . keep reading
Reducing your capital gains tax to 10% on overseas property
Reducing your capital gains tax to 10% on overseas property Establishing that a trade exists can be highly advantageous when it comes to minimising your UK taxes on overseas property. This article looks at how you can still qualify for a 10% rate of CGT. . . . keep reading
Entrepreneurs Relief on foreign shares - USERNAME: AIRCIRCUS - 25/06/2014
Tax Question: Can a uk resident who owns 50% of a company in Gibraltar,claim Entrepreneurs relief. The Gibraltar company owns a nursing home in the UK. Also what are the terms and conditions to be eligible to claim ER. . . . keep reading
Using an LLP to maximise Entrepreneurs Relief and reduce capital gains tax
Using an LLP to maximise Entrepreneurs Relief and reduce capital gains tax The Entrepreneurs Relief provisions provide anyone selling a trading business with a significant reduction in their capital gains tax liability. Many business owners will look to establish businesses using a company but is this always the best structure? This article looks at the advantages of using an LLP in terms of maximising Entrepreneurs Relief and reducing capital gains tax . . . keep reading
Entrepreneur's relief and the annual CGT allowance - USERNAME:Tony - 21/03/2014
Tax Question: Hi I have a Ltd Co contractor client who commenced their Ltd business on the 1st Sept 2013 and has now decided to cease trading in March 2014. There are £9,000 in post -tax reserves remaining in the company. One of the considerations is to apply for Entrepreneur's relief on the £9,000. However, i am aware this cannot be done until the 1st Nov 2014 (after 12 months). Question 1) Is it possible to classify the £9,000 reserves as a capital distribution (without going down the ER route) and claiming the annual CGT exemption thus avoiding any tax on the final amount? If so, is there any criteria to be aware of? 2) If we were to go down the ER route, would & can we wait until the 1st Nov 2014 before applying or would the fact the this company has not been trading between Mar 14 - Nov 14 affect its ability to successfully claim ER? Many Thanks . . . keep reading
VIMBO and Entrepreneurs Relief - USERNAME: bgc - 28/02/2014
Tax Question: Entrepreneur Relief query Employee with 16% shareholding works fulltime in unquoted trading company - has held shares for more than 1yr. Sells holding as part of a VIMBO restructuring into a newco. The consideration received as a result of the VIMBO is £200k cash and 8% ord s/holding and pref shares in the newco. The employee continues to work in the newco. Will the oldco disposal proceeds of £200k be eligible for ER? . . . keep reading
Private lettings relief and Entrepreneurs relief on disposal of guest house - USERNAME: 1pjgs2 - 27/01/2014
Tax Question: Fully furnished UK guest house B&B on disposal. Thank you very much for your answers. Sorry, I was not clear on my third question [copied below]. My meaning was that the ltd company would take the role of running and managing the guest house in 2/3 of the house. Would PLR, CG annual allowance and entrepreneurs relief still be eligible? 3. If the whole house was privately owned and a ltd company shares wholly owned and managed by same house owner 'traded' in 2/3 of the guest house, and: -the house and business were sold at the same time -no rent received by the property owners from the ltd co. -owned/traded period of more than one year. Would the above set-up still be eligible for annual allowance, PLR and entrepreneurs relief as an 'associated disposal ? . . . keep reading
Disposing of shop and flat - Entrepreneurs Relief? - USERNAME: Rob - 27/01/2014
Tax Question: Dear Sir Following up on question dated 29/11/2013, on the shop and flat Capital Gains Tax, the following is the final situation. The trade through Ltd co was ceased in 2007, objective was to sell the shop. The business was operated through Ltd company owned 50% by me, and rent equivalent to mortgage payment was charged which was slightly less then the market rent. Property sold in July 2012, will I be able to claim entrepreneur investment relief? Looking forward to hearing from you. . . . keep reading
Capital Gains tax follow up - USERNAME - Amjipooh - 16/01/2014
Tax Question: A client of mine is selling the shares to his company under "purchase of own Shares by the company arrangements". At present he owns 67 and wife 33 out of 300 total shares. The agreement with fellow shareholders demands that wife should transfer 33 shares to Husband first and then Husband will sell 100 shares back to the company. Will it affect entrepreneur relief as Husband has not held these shares for more than 12 months. Husband and wife are both employee of the company as well. Further : Husband is confident that he will get the relief on his own shareholding but the query is "can Husband get the relief on the share he acquires from wife just before disposing off. Thanks . . . keep reading
Entrepreneurs Relief on transfer of shares from wife - USERNAME:amjipooh - 15/01/2014
Tax Question: A client of mine is selling the shares to his company under "purchase of own Shares by the company arrangements". At present he owns 67 and wife 33 out of 300 total shares. The agreement with fellow shareholders demands that wife should transfer 33 shares to Husband first and then Husband will sell 100 shares back to the company. Will it affect entrepreneur relief as Husband has not held these shares for more than 12 months. Husband and wife are both employee of the company as well. . . . keep reading
What can I do to qualify for Entrepreneurs Relief is my company holds cash on deposit? - USERNAME: mrgprfl - 18/12/2013
Tax Question: My accountant advises I may not qualify for Entrepreneurs tax relief if I choose to wind up my company at some point in the future because the company holds cash which is invested in a number of fixed term deposit accounts, and this may cause HMRC to argue that it is not a trading company. It is not tax effective for me to take dividends at present. Can you advise of any other tax effective strategies and also if it would be more helpful to put cash in notice or instant access accounts? . . . keep reading
CGT reliefs available on disposal of flat and shop - USERNAME: Rob - 29/11/2013
Tax Question: Dear Sir, I bought property with shop and flat in 1985. From the shop me and my partner started trading in around 1988 through sole trader in my name and the partner was on salary. I lived on flat till 1991. Around 1993 I transfer the half of the share of the property to my partner and he was working as employee as explained above. In 1999 my partner formed the Ltd company he became sole owner / Director and I became employee, rent was charged to Ltd co and shared equally between both of us in self-assessment. Then I left employment in 2001, and went on to work somewhere else, and my partner worked till 2009 with Ltd company and ceased trading. For 4 years trading premises remained vacant and ultimately both flat and shop is sold in 2013. We wanted to establish if we be able to get any business related tax reliefs for CGT and how this will work. We understand that we need to apportion gain between shop and flat and then apply relevant reliefs, for flat we are fine but for shop we are not sure due to structure as explained above. Your help in this matter will be much appreciated as to who will be entitled to which relief. . . . keep reading
Entrepreneurs relief for non doms and the remittance basis
Entrepreneurs relief for non doms and the remittance basis Making the most of this generous tax relief can reduce your rate of CGT to just 10%. It can apply to non UK domiciliaries selling overseas businesses or shares in overseas trading companies. This article looks at how Entrepreneurs Relief applies to non domiciliaries whether they are taxed on the arising basis or the remittance basis. . . . keep reading
Entrepreneurs Relief for corporate member of LLP - USERNAME: njg - 17/09/2013
Tax Question: Have a profitable partnership storing profits not needed for drawing. Was thinking of establishing a limited company as a corporate member to the partnership so the excess profits are transferred to the company to be taxed at corporation tax rates. The company will only have income in the form of share of profit from the Partnership. The intention being to undergo a formal liquidation in a few years to wind up the company to achieve a capital distribution covered by entrepreneurial relief. If the income is 100% share of profit will the ultimate distribution obtain ER relief? . . . keep reading
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