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Hi,
The following is the part of conditions for entrepreneurs’ relief.The disposal of shares in a trading company where the individual has at least a 5% shareholding in the company AND is also an employee (part time or full time) of the company for the 12 months prior to disposal.
There is no restriction of the relief if the company owns investments.
The company is either a trading company or it is not, there is no apportionment of the gain
eligible for relief.I have a problem with understanding the second and third sentences. Could you explain it in a simpler way?
For entrepreneurs relief and gift relief, the company in which you own shares must be a trading company, but the company may also own investments as well as trading assets. If so this would limit the gain eligible for gift relief to the proportion CBA / CA – see notes and lecture.
No such proportionate calculation of the gain applies to entrepreneurs relief – if the company is a trading company then entrepreneurs relief is available in full and if it is an investment company then no entrepreneurs relief is a available. The company will only be classified as an investment company for this purpose if more than 20% of its assets are in the form of investments though this knowledge is not within the TX-UK syllabus!
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