Entrepreneurs’ relief tweaked to encourage investment

The government is consulting on legislation – announced in the last Budget – to allow individuals who no longer hold a 5% interest in a company to claim entrepreneurs’ relief if the reduction is caused by that business issuing shares to raise capital for the purposes of its trade.

The new rules will apply to gains latent in shares and securities held at the time of fundraising events that take place from 6 April 2019.

It will be achieved by allowing individuals to elect to be treated as having disposed of and reacquired their shares at the then-market value and allowing individuals to defer the taxation of this gain until the shares are sold.

Currently full entitlement may be lost when an entrepreneur’s company issues new shares that cause their personal stake to fall below 5%.

Responses should be emailed by 15 May to PCR.ER.Consultation@hmtreasury.gsi.gov.uk.

David Kilshaw...