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Hi Keith, thank you for your response. I want to avoiding the dividends method as a last resort due to the high taxation.
can you confirm that in reducing my shareholdings in my company which i hold 50% shares in would enable me to release capital ( to the sum I wish it to place on the share), I would then be liable for entrepreneur’s relief at 10% ( up to £10m). I pay the 10% tax then I would be entitled todo what wish with the monies? Is this a way forward? Appreciate your expertise on the matter. Hesam
From April 2016 Hesam the first 5K of dividends are not taxed at all.
I cannot advise fully on Entrepreneurs' Relief (ER) until I have more detail.
Here is the relevant Gov UK advice:
'If you’re selling all or part of your business
All the following must apply:
If you satisfy these rules then you would be entitled to ER.
Hi Keith, here are some answers and a subsequent question:
* I am a business partner/director with 50% ordinary shareholdings in a Ltd company
* I have owned the company since 2010 ( 5years)
* I'm not sure what the following means "you sell or dispose of your business assets within 3 years after selling or closing the business". I want to reduce my share capital - maybe this is selling my shares back to the company? would this comply with the required statement?
company is still trading, so this method would be possible?
when writing this i was under the assumption that there are no restrictions on dilute your shares before selling / having your company buy back while still qualify for Entrepreneurs relief. E.g. If you dilute 1 ordinary share to 10,000, do you have to hold it for X number of years before selling and qualifying for Entrepreneurs relief? i do apologise if im asking too many questions here, i just want to be sure -i appreciate your advise. thanks
Providing you do not dilute below the 5% level you should be ok.
Watch out though for the ER lifetime limits [source CG63955;:
'The amount of Entrepreneurs’ Relief is subject to a ‘lifetime’ limit of gains in respect of which the relief can be given. The amount of this ‘lifetime limit’ is -
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