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bigduckontax, Accountant
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Do you know about entrepreneur tax relief Assistant: Have

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hi do you know about entrepreneur tax relief
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Customer: replied 25 days ago.
I started a software company 25 years ago, we are going to sell all the shares/company (4 directors 25% each ) , the deals is deferred payment over 5 years £100,000 / year, £500K totalin order to get 10% entrepreneur tax relief what is the best way to sell the share all at once, or should we sell 20% / year then claim relief each yearthe deal will have some caviares that we must undertake some actions if needed

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

In general terms Entrepreneurs' Relief (ER) applies when you go out of a business and limits the capital gain you make to a flat rate of 10% as opposed to the normal 10 or 20% depending on your income including the gain in the tax year of sale. You must sell at least 5% of the business to qualify for ER.

\i do hope that you have found my reply of assistance.

Customer: replied 25 days ago.
we are selling 100% of the business, the contract will have T&C , one will be that we are paid 1/5 of the total deal each year, so if we sold 100% hears year 1, we would only have been paind £100K which we could clain TR in, year 2, we receive the second 100K, I assume we would have to pay standard tas ion this 100K as this would be incomeif we sold 20% of the share each year over 5 year could we calin ER for each year 10% on each of the 100K payments

From your data you would be entitled to claim ER on all tranches of the settlement.

Customer: replied 25 days ago.
this is why I an doing research I read this, which to me seems to say ER is only on the fist 20%One of the biggest risks with deferred consideration is the potential for a higher capital gains tax liability payable by the selling shareholders. The 10% Entrepreneurs’ Relief rate on capital gains applies on a disposal of shares or securities by an individual where, during the 12 months ending on the date of disposal, the seller:Holds 5% or more of the ordinary voting share capital of a trading company or holding company of a trading group; and
Is an officer or employee of the company.

Sorry, I do not agree. ER will apply if a proprietor sells 5%+ of their holding providing that these have been held for a year.

Customer: replied 25 days ago.
as you can see confusing https://www.gannons.co.uk/expertise/tax/tax-shareholder-transactions/deferred-consideration/

Yes, but I was using the Gov UK Web Site's advice. I cannot possibly comment upon another commercial organisation's opinion.

Customer: replied 25 days ago.
ok, so I am a bit confused and tax is confusing if is sell 20% of the shares each year for 100K / year, cn i calim ER reach year in each transation

Correct, there is a lifetime limit of 10 million quid claimable.

Customer: replied 25 days ago.
looking at https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-entrepreneurs-relief-2017we have 4 shareholders example 3, seems to say of one shareholder sell they 25% to a 3rd party each, they can ER on the sellwe all sell our interests 1 yesr at a time, would this mean we each can clam our ER as we have left the business
Customer: replied 25 days ago.
sorry example 2

You can, but there is a lifetime 10 million quid ER restriction.

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