Must own 5% of ordinary shares to qualify for CGT Entrepreneurs Relief

Must own 5% of ordinary shares to qualify for CGT Entrepreneurs Relief

In order for a shareholder to qualify for CGT entrepreneurs relief on the disposal of their shares, they must be an officer or employee of the company (or group) and hold 5% or more of the company's ordinary share capital and voting rights for 12 months prior to the disposal. The company must also be a trading company or the holding company of a trading group throughout the same 12 month period.

In a recent tax case, the judge agreed with HMRC that in determining whether or not the shareholders held the required 5% of the ordinary share capital, all of the company's shares should be considered except those with a fixed rate of dividend (preference shares). A lower court had previously decided that preference shares with no entitlement to dividends and voting rights could be disregarded.

If you would like more information, or would like to discuss your tax affairs in general, please contact our Tax Partners Steve Crompton or Chris Barrington on the details below:

Steve Crompton
Partner - Head of Tax
direct dial: 01942 292541
mobile: 07790 840394
email: steve.crompton@jsllp.co.uk

Chris Barrington
Tax Partner
direct dial: 01942 292505
mobile: 07730 436070
email: chris.barrington@jsllp.co.uk

 

 

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