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It's a wind-up for Entrepreneurs' Relief

It’s a wind-up for Entrepreneurs’ Relief

March 2016

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The right to Entrepreneurs’ Relief is going to end very soon for many shareholders in members voluntary liquidations


One way for entrepreneurs to reduce their tax bills has been to wind their company up and distribute the assets and then move onto the next business, possibly doing something similar. The most tax they will pay will then be capital gains tax at 28%, but it could be as low as 10% if they can claim Entrepreneurs’ Relief. If they had paid themselves a dividend they would have had to pay more by way of income tax.

The Revenue doesn’t like this so are going to change the rules. People will have to pay income tax instead if:

· They are a shareholder in a close company (which includes most companies) and receive a distribution in respect of their shares on a winding-up; and

· If within two years after the winding-up they continue to be involved in a similar trade or activity; and

· One of the main purposes of the winding-up was to avoid the more expensive income tax treatment.

The changes are in the current Finance Bill 2016 which is due to be passed in the next month or so.


· If you were planning to do this, do it quickly before the law changes. Let me know if you want an introduction to a good accountant/insolvency practitioner who can help you with this.


· Stop trying to avoid tax you should properly be paying!

Andrew James