New Central Register for Beneficial Owners of Irish Companies comes into play
18th June, 2019

Entrepeneurs Relief – New Amendments


Following on from last year's autumn budget where the Chancellor announced two key changes to Entrepreneurs Relief, which were:

  • The qualifying holding period being extended from 1 Year to 2, effective from 6 April 2019
  • The qualifying shares must now entitle the holder thereof to 5% of dividend, and 5% of capital distribution, effective from 29th October 2018

The government announced in December (2018) draft amendments to the Finance Bill 2018-2019 that will affect the entitlement of owners of alphabet shares which are different classes of shares designated with a letter.

Initially, the key changes set out in the autumn budget resulted in the definition of a personal company including two new conditions which were:

  • an entitlement to at least 5% of the profits that are available for distribution and;
  • an entitlement to at least 5% of the assets on winding up of the company

These new conditions excluded owners of alphabet shares who have unequal dividends paid to shareholders, which meant alphabet shareholders would not be eligible for Entrepreneurs Relief.

However, after considerable amounts of concern was expressed by professional bodies and industry individuals HMRC proposed amendments to the Finance Bill 2018 – 2019. Specifically, the definition of a personal company.

The amendment, which has now been accepted and the Finance Bill passed defines a personal company as follows: "Either or both of the following conditions are met–

  • by virtue of that holding, the individual is beneficially entitled to at least 5% of the profits available for distribution to equity holders and, on a winding up, would be beneficially entitled to at least 5% of assets so available, or
  • in the event of a disposal of the whole of the ordinary share capital of the company, the individual would be beneficially entitled to at least 5% of the proceeds."

This amendment means a company with alphabet shares that is disposed of and their shareholders who have an entitlement to at least 5% of the proceeds will qualify for Entrepreneurs Relief even if they do not pass test.

Talk to the company secretarial team if you would like us to check and redraft your articles.

Email: suzanne.alves@stanleydavis.co.uk

Tel: Tel: 0207 554 2261

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