Entrepreneurs’ relief and associated disposals

Legislation will be introduced in the 2015 Finance Bill to prevent claims to entrepreneurs’ relief in respect of gains on disposals of privately-held assets used in a business unless they are associated with a significant material disposal (i.e. a disposal of at least a 5% shareholding in the company or of at least a 5% share in the assets of the partnership carrying on the business). These changes have effect for disposals on or after 18 March 2015.

Entrepreneurs’ relief, joint ventures and partnerships

It was announced that legislation will be introduced to prevent claims to entrepreneurs’ relief in respect of gains on shares in certain companies which invest in joint venture companies, or which are members of partnerships. The new rule will deny relief where the investing company has no trade (or no relevant trade) of its own. These changes have effect for disposals on or after 18 March 2015.

Entrepreneurs’ relief on goodwill

As announced in the Autumn Statement 2014, legislation will be introduced to prevent claims to entrepreneurs’ relief in respect of gains on business goodwill, where the goodwill has been disposed of to a limited company which is related to the claimant. Following consultation, the legislation has been revised to allow entrepreneurs’ relief to be claimed by partners in a firm who do not hold or acquire any stake in the successor company. These changes affect transactions on or after 3 December 2014.

Entrepreneurs’ relief and academics

There is to be a consultation on the capital gains tax (CGT) treatment of gains made by academics on disposals of shares in ‘spin-out’ companies. Any necessary legislation will be introduced in a future Finance Bill.