Entrepreneurs' Relief

By Fleur Benns, Mathew Oliver


Entrepreneurs' Relief ("ER") allows office-holders and employees to benefit from a 10% tax rate on capital gains if certain conditions are met. This fact sheet deals with ER on the disposal of shares by individuals in the UK. It includes some case studies illustrating how employee incentive arrangements can be structured so as to qualify.

ER also applies to disposals of businesses and assets used in businesses but these are not dealt with here.

The rate of capital gains tax is generally 20% (or 10% for individuals with income and chargeable gains below the higher rate income tax threshold of £46,350 for 2018/19). An individual who qualifies for ER, by contrast, is taxed 10% on chargeable gains up to a lifetime limit of £10 million. ER is therefore a very valuable relief for higher rate tax payers as it enables individuals to save up to £1 million of capital gains tax.

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