Budget 2015 – What changes were made to Entrepreneurs' Relief?

19th March 2015

Budget 2015 – What changes were made to Entrepreneurs' Relief?


Some commentators were fearing that there would be changes to the 10% tax rate which applies to the sale of a partnership interest or the sale of shares in a limited company, widely considered to be a generous relief.     

The 10% rate also applies to individuals and partners who sell personal assets which are used in the business, for example, a commercial building owned by an individual but used by the business.  This relief has only applied where there has been a disposal of an interest in a partnership or company, however small,  at the same time that the personal asset is sold. 

However, although the rate has remained at 10% there has been a subtle change in this area. 

The new rules now require individuals who sell their own assets to also sell at least 5% of their shares in their company or at least 5% of their share of the partnership assets,  as part of the “associated disposal”.     This will therefore adversely affect those individuals who sell their business assets but do not reduce their share of the ownership of the actual business to any significant degree. 

According to HMRC, this change will not have any significant economic impact but it does emphasize HMRC’s objective of ensuring that Entrepreneurs’ Relief is available only to those who are selling genuine stakes in businesses. 


Written by Paul Feist, Director

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