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Markel Tax

13 Mar 2018

Dilution of shares and entrepreneurs’ relief

In the Autumn Budget 2017 the Chancellor announced that there would be changes to entrepreneurs’ relief to address the situation where an individual’s shareholding is diluted to below 5% because of a fresh issue of shares by the company.

It is proposed that with effect from 6 April 2019 where there is a fundraising event that dilutes an individual’s shareholding to below 5% that individual will be able to elect to be treated as having disposed of and immediately reacquired their shares at the then market value, and will also be able to defer the taxation of the gain until an actual disposal of shares takes place.

The objective is to promote enterprise by ensuring that early investors are not penalised because of the growth plans of a company in which that individual has invested.

These proposals are not expected to apply to trustee shareholdings.
Next article in series

13 Mar 2018

Corporate tax and the digital economy: position paper

The speed and scale of the changes caused by digitalisation have had implications for the UK tax system especially in respect of corporation tax, where the development of certain business models has challenged the understanding of how and where companies create value and ultimately how that value is taxed.

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