On Budget Day, the Chancellor announced that two additional conditions would be introduced to the definition of “personal company” for the purposes of Entrepreneurs’ Relief (ER). The tests take effect from 29 October 2018, and are intended to ensure that an individual benefiting from ER on a sale of shares has a material stake in the company. The two new tests are included within paragraph 2, Schedule 15 of Finance (No. 3) Bill. They require the individual to have a 5% interest in both the distributable profits and net assets of the company through the one year (increasing to two year) period prior to disposal.
