Finance Bill entrepreneurs’ relief proposals amended

Released 24 December 2018

The government has amended the Finance (No. 3) Bill proposals on entrepreneurs’ relief to ensure that the revised legislation operates as intended.

Clause 38 and Schedule 15 contain proposals for amending the rules for entrepreneurs’ relief (ER) in various ways, including introducing two new tests into the definition of a claimant’s ‘personal company’ which applies for ER purposes. The changes are designed to improve the effectiveness of ER by ensuring that claimants disposing of shares have a minimum economic stake in the company.

The government has made two amendments to the provisions in Schedule 15 introducing an alternative test into the definition of ‘personal company’, which can apply instead of the original two tests introduced by the Schedule. This alternative test is based on the claimant’s entitlement to a share of disposal proceeds in the event of the company being sold.

The amendments are designed to ensure that the legislation operates as intended, by allowing claimants to use their entitlement to the sales proceeds of the company as evidence of their economic stake, in circumstances where their entitlement to the profits and assets of the company cannot be demonstrated.

View Amendments 2 and 3 to Clause 38 and Schedule 15: Entrepreneurs’ relief.

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