For business owners looking to dispose of their business in the near future, now is the time to potentially accelerate that process. This is according to Duff & Phelps, the global advisor that protects, restores and maximises value for clients.
For many years, business owners have been able to take advantage of ER which allows company directors and employees to benefit from a 10% tax rate on capital gains if certain conditions are met at the time of sale.
There are many reasons why entrepreneurs may wish to sell their business. Irrespective of the reason, business owners can benefit from a reduced tax rate on their capital gain by utilising ER up to a maximum lifetime limit of £10m.
Eddie Bines, Director, Restructuring Advisory, Duff & Phelps, stated:
“It’s called entrepreneurs’ relief for a reason as business owners can reduce the amount of Capital Gains Tax payable to a rate of 10% when they dispose of all or part of their business. It is available to sole traders or partners and company directors and employees holding 5% or more in shareholdings.
From the beginning of this tax year, entrepreneurs must own their business for two years before selling in order to qualify for relief, up from the previous one year. From 29 October 2018 entrepreneurs also have to own shares entitling them to 5% of distributable profits of the business and net assets of the company (as opposed to simply voting rights) in order to qualify.