It results in a tax rate of 10% on the value of the disposal. There’s no limit to how many times you can claim and you can claim up to £1 million of relief during your lifetime (prior to 6th April 2020 the lifetime limit was £10 million). The same rules apply regardless of the rate of income tax you pay.
There is a qualifying period to claim Entrepreneurs Relief which means the share disposal needs to have happened within two years of the end of the relevant tax year.
You must also meet all of the following conditions:
Where the company intends to cease trading and dissolve, the relief can still be claimed provided:
You need to claim Entrepreneurs’ Relief by the first anniversary of the 31st January following the tax year of the disposal of shares:
|Tax year ended||Deadline to claim|
|5th April 2021 (2020/21 tax year)||31st January 2023|
|5th April 2020 (2019/20 tax year)||31st January 2022|
|5th April 2019 (2018/19 tax year)||31st January 2021|
You can make a claim on your annual Self Assessment return in the supplementary ‘Capital Gains Summary’ section. However, seeking advice beforehand from an accountant is highly recommended.
Investors’ Relief, which enables qualifying shareholders to benefit from a 10 percent rate of capital gains tax on the first £10 million of capital gains, is to continue unchanged. Investors’ Relief is available to investors in qualifying shares of an unlisted trading company (or the holding company of a trading group). Unlike Entrepreneurs’ Relief, it is only available to investors who are not employees involved in the running of the business.
Other Entrepreneurs’ Relief rules apply if selling other assets (ie. not shares). Please speak with your accountant for bespoke advice in this area. As always, this article is only provided for general information. For specific advice on your individual circumstances, please speak with your accountant.