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April 2019 tax changes to Entrepreneurs’ Relief

Changes announced to Entrepreneurs’ Relief (ER) in Autumn Budget 2018 have now come into effect and will impact UK businesses.

Ravi Basra, corporate tax manager at Blick Rothenberg said, “Much negative press coverage has been received in response to ER changes announced by the Chancellor during the 2018 Autumn Budget, including increasing the qualifying holding period from one to two years and 5% qualifying conditions. These changes have recently been enacted as part of Finance Act 2019 (FA 2019).

However, Ravi added, “Included within the ER changes was a nugget of good news for unincorporated businesses that have previously disposed of their assets on incorporation in exchange for shares in a new company, on which hold-over relief under section 162 of the Taxation of Chargeable Gains Act (TCGA) 1992 has been claimed. Prior to FA 2019, the qualifying period for ER purposes re-started from the date the shares were issued. With effect from 6 April 2019, the period immediately before a transfer of a business to a company to which s 162 applied is now to be treated as a part of the qualifying period for the holding of shares.”

Ravi added: “Given the proposed extension of the qualifying period for ER, this change could be especially helpful to private company shareholders that receive offers for sale shortly after incorporation.”

For more information, please contact Ravi Basra.