Entrepreneur's Relief and LLP's

Entrepreneur's Relief and LLP's

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A client of mine is involved with an LLP.

The LLP has two limited company partners and no individuals as partners.

My client is one of the limited company partners and that company is owned on a 50/50 basis.

The LLP is planning to set up a limited company as a trading subsidiary.

My client is convinced that in two years time when the trading subsidiary is sold he and his business partner in the 50/50 company will get Entrepreneur's relief.

I'm not convinced for two reasons.

1.   The rule change on 18 March

2.   The LLP would be making the gain on the sale and the gain would form part of its profit distributed to its partners and therefore tax at corporation tax rates.

Help!

Replies (4)

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By johngroganjga
18th Aug 2015 15:23

Ask your clients what gain they think they will be able to claim ER on.

As you say the gain will be made by their company not by them. 

Thanks (1)
Replying to sonoftwosheds:
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By petestar1969
25th Aug 2015 15:04

Well

johngroganjga wrote:

Ask your clients what gain they think they will be able to claim ER on.

As you say the gain will be made by their company not by them. 

 

John

He believes he will get ER when the LLP sells the trading subsidiary.

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By johngroganjga
25th Aug 2015 15:13

Then ask him how he, rather than his company, will have a gain.  He can't have a gain on selling something that is not his.

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By petestar1969
25th Aug 2015 15:25

Exactly the point I tried to make to him, but he wouldn't have it.

I'll get back to him and explain it all in simple terms...

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