Entrepreneurs’ relief was introduced in the 2008 Capital Gains Tax reform; it only applies to disposals on or after the 6th April 2008. Please refer to HS275 for more information.
Entrepreneurs' relief can be claimed on business assets where the sale of an individual's business has occurred.
Losses associated to the disposal of a qualifying business must be deducted from the gain before you create the entry in IRIS.
Entrepreneurs' relief can be claimed on shareholdings providing it is a personal company at any time and the individual holds no less than 5% of the ordinary share capital or the holding gives the individual at least 5% of the voting rights in the company.
Entrepreneurs' relief is given by taxing the gain at 10% instead of the capital gains tax rates of 18% and 28%. (Prior to 23rd June 2010 it was calculated as 4/9ths of the gain; this gives an effective rate of tax of 10%).
Entrepreneurs’ relief has a life time limit of £10,000,000, this limit has increased since 2008:
£1m from 6/4/08 to 5/4/10
£2m from 6/4/10 to 22/6/10
£5m from 23/6/10 to 05/04/11
£10m from 06/04/11
Entrepreneurs' relief can be claimed on the disposal of properties that are Furnished Holiday Lettings.
Properties related to the sale of a business qualify for entrepreneurs' relief providing they are disposed of within three years of the sale of the business. This may not apply to the sale of limited company shares.
Entrepreneurs' relief is available on disposal of qualifying assets in held in trust where an individual is a qualifying beneficiary.
Please read the quick guide for details on how to calculate this in IRIS.