Entrepreneurs’ tax relief has been extended to include long-term investors in unlisted companies.
Entrepreneurs’ relief applies to business owners seeking to sell on their business, who are eligible for a preferential tax rate of 10 percent on business gains for up to £10 million.
As part of the new ruling, entrepreneurs will be able to secure a 10 percent rate of capital gains tax on newly issued shares in unlisted companies bought on or after 17 March 2016; providing they are held for at least three years from 6 April 2016.
These will also be subject to a separate lifetime limit of £10 million of gains.
This will allow individuals to finance a business and obtain the 10 percent entrepreneurs’ rate without having to work in the business itself. Indeed an individual could qualify for £20 million at the entrepreneurs’ rate of 10 percent relief if they invest and work in one business and provide finance to another.
The Government will also be allowing entrepreneurs’ relief to be claimed on the disposal of privately held business assets to a family member; whilst allowing for tax reliefs in joint business ventures and partnerships where the existing five percent minimum holding conditions are not satisfied.