RM2 > Resources > Useful Information > Entrepreneurs' Relief

Entrepreneurs' Relief (ER)

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Entrepreneurs' Relief allows individuals and some trustees to claim relief on qualifying gains made on the disposal of any of the following:

  • All or part of a trading business
  • The assets of a business after it has stopped trading
  • Shares in a company

In the United Kingdom, individuals selling shares in their employer company (technically "qualifying assets") can claim Entrepreneurs' Relief if certain conditions are met. A lifetime limit of £10,000,000 of gain will be taxed at a reduced rate of 10%.

Who qualifies?

Unless shares have been acquired as a result of exercising an Enterprise Management Incentive (EMI) option on or after 5th April 2012, to be eligible for the relief, you need to:

  • Be an employee or officer of the company in the year leading up to the sale (Note that there is no minimum working time requirement. Non executive directors and company secretaries count as officers); and
  • Hold shares in the trading company conferring at least 5%* of the voting rights; and
  • Hold the qualifying shares for at least 12 months leading up to the day of sale.

If shares are being sold and they were acquired under EMI then a more relaxed eligibility test applies as follows:

  • If shares acquired under EMI are sold more than a year after the option was granted, Entrepreneurs’ Relief is now available. This means that Capital Gains Tax (CGT) applies at an effective rate of just 10% (on gains up to a £10 million lifetime limit).

For more information on the benefits of Entrepreneurs' Relief, please contact RM2 directly on 020 8949 5522, or email us via enquiries@rm2.co.uk.


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