As the infamous Franklin quote goes “in this world nothing can be said to be certain, except death and taxes”, but with ever-changing and increasingly complex legislation coming into force, managing your tax affairs can seem like a very uncertain minefield for many.

Take Entrepreneurs Relief (“ER”). Since it’s introduction, laws and policies have been repeatedly modified. But what are the changes / what implications have they had?

The Autumn Budget extended requirements to qualify for ER beyond voting rights and holdings of ordinary share capital (of which 5% must be held) and extended to include entitlement to profits and rights to assets in a winding up (the 5% requirement being in respect to all equity holdings).

The qualifying period was extended from 1 to 2 years. The above changes caused many deals to stall / fall over, resulting in significant waves of lobbying. A third test was then introduced which can be applied where entitlement to company profits and assets cannot be demonstrated. This test requires the individual to be beneficially entitled to at least 5% of the proceeds in the event of a disposal of the whole of the company.

These changes have encouraged many individuals to stand back and review their tax structures, often seeking professional advice, and have also delayed the sale of many businesses whilst further clarity is sought.

Tax affairs are seldom straight forward and ensuring compliance where draft legislation is announced and then altered significantly undoubtedly creates uncertainty.

If you would like any advice on any tax matters, please do not hesitate to get in touch with a member of our dedicated team.