Budget 2016 - Surprise move as Entrepreneurs’ relief is extended to external investors
Entrepreneurs’ relief provides a 10% tax rate on the first £10m of capital gains on the sale of a trading company for directors or employees that own over 5% of the shares. Prior to the Budget, there was much talk about possibly reducing the benefits, however in a surprise move the relief has actually been extended to external investors who have purchased newly issued shares from today (as long as they are held for three years).
It will be interesting to see how well used this becomes due to the similarities to the Enterprise Investment Scheme (“EIS”). Although there are more conditions to be met to claim EIS, it is much more generous with a 30% income tax saving on investment and a complete exemption from CGT on the sale.