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bigduckontax
bigduckontax, Accountant
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I own a 20% share in my company and i plan to leave. We have

Customer Question

I own a 20% share in my company and i plan to leave.
We have 500k liquid cash on the books plus 500k in open orders.
The company have said they will buy my shares but use the company equity to do so and then hold those shares in Treasury.
I have held my shares since Feb 2012.
Would i qualify for Entrepreneur tax relief at 10% on the gains ??
Submitted: 5 months ago.
Category: Tax
Customer: replied 5 months ago.
The company and myself are based in the UK (England)
Expert:  bigduckontax replied 5 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

If you are going out of this business then Entrepreneurs' Relief (ER) will limit you Capital Gains Tax (CGT) exposure to a 10% flat rate. This used to be a generous concession, but as CGT is now levied at 10% or 20% or a combination of the two rates depending on your income including the gain in the tax year of disposal the savings are less significant. There are some conditions and limitations, hoops you must go through before ER applies. You can find them summarised here:

https://www.gov.uk/entrepreneurs-relief/eligibility

I do hope that you have found my reply of assistance.

Customer: replied 5 months ago.
Do you know if the company buying my shares out of the company funds and the fact i have only been in the business for 4 years and 6 months will make me eligible ?I have heard i need to be in the business for 5 years or i will have to pay higher rate tax.
Expert:  bigduckontax replied 5 months ago.

The Gov UK link I gave you makes it clear that you have to be in business for at least a year to be entitled to ER [see Paragraph 1].

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