Cheltenham: 01242 260066 | Bristol: 0117 933 5710 | Email accountants@mitchells.org

Changes to Entrepreneurs' Relief

Increase in the minimum qualifying period

The minimum period throughout which certain conditions must be met to qualify for Entrepreneurs' Relief (ER) is being increased from one year to two years. This has effect for disposals on or after 6 April 2019, except where a business ceased before 29 October 2018. Where the claimant's business ceased, or their personal company ceased to be a trading company (or the holding company of a trading group) before 29 October 2018, the existing one year qualifying period continues to apply.

The new 5% rules for company shareholders

To qualify for ER, the company needs to be an individual's 'personal company'. This means that an individual must, throughout the relevant qualifying period:

  • be a company employee or office holder
  • hold at least 5% of the company's ordinary share capital; and
  • be able to exercise at least 5% of the voting rights.  

For disposals on or after 29 October 2018, an individual must also satisfy either of the following:

  • distribution tests which require the individual, by virtue of that holding, to be entitled to at least 5% of the company's profits available for distribution to 'equity holders' and 5% of the assets available for distribution to 'equity holders' in a winding up; or
  • a proceeds test which requires the individual, in the event of a disposal of the whole of the ordinary share capital of the company, to be beneficially entitled to at least 5% of the proceeds.

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Contact details

Cheltenham Office: 01242 260066
Bristol Office: 0117 933 5710

Company Registration No: 4161638
Company Registered in England and Wales.
Company details
Mitchell Glanville Limited
Registered Address: 41 Rodney Road, Cheltenham, Gloucestershire GL50 1HX

Bristol Office: The Garden Suite, 23 Westfield Park, Redland, Bristol BS6 6LT
Mitchell Glanville Limited regulated by the Institute of Chartered Accountants in England and Wales
Mitchell Glanville (Bristol) Limited regulated by the Association of Chartered Certified Accountants

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