Entrepreneurs’ relief and the equity dilution trap

14 Sep 2018

Entrepreneurs’ relief (ER) can easily be lost due to the dilutive effect of a subsequent share issue – but help is at hand, explains Peter Rayney FCA, CTA (Fellow), TEP

Entrepreneurs’ relief (ER) gives a beneficial 10% capital gains tax (CGT) rate on the sale of shares in owner-managed trading companies, and is therefore a highly valued relief. The qualifying conditions for ER are reasonably generous since they enable many ‘small’ minority shareholders to benefit from the relief.

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