The following Share Incentives guidance note Produced in partnership with Andrew Evans of Geldards LLP provides comprehensive and up to date legal information covering:
Entrepreneurs’ relief (ER) is available for shares in trading companies provided the conditions in sections 169H–169SH Taxation of Chargeable Gains Act 1992 (TCGA 1992) are satisfied.
ER results in a capital gains tax (CGT) rate of 10% on lifetime chargeable gains of up to £10m measured on or after 6 April 2008.
In basic terms, an individual holding shares in a trading company qualifies for ER in relation to those shares if:
the individual is an employee or an officer of the company (or a company within the group where the shares are held in the holding company)
the company is a ‘personal company’ in relation to the individual, and
both the employment condition and the shareholding condition are satisfied for the one-year period leading up to the date of disposal of the shares (extended to two years for disposals made on or after 6 April 2019)
A ‘personal company’ requires:
a holding of at least 5% of the ordinary share capital of the company by nominal value, and
a holding of at least 5% of the voting rights of the company, and
either or both of the following conditions are met:
by virtue of the Finance Act 2019 coming into force, in relation to disposals on or after 29 October 2018, a beneficial entitlement to at least 5% of the
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