Entrepreneurs Relief Shares Received as Part of Divorce Settlement

Entrepreneurs Relief Shares Received as Part of...

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I have a lady client divorced from her husband quite recently.

As part of the divorce settlement the husband had to give her half his shares in a private limited company which he had he helped set up several years ago (she had no shares prior to this).

The divorce was finalised in March 2013.The shares were transferred to my client on 31 Jan 2013.

The company was sold in December 2014 and she received £134,596 for her shares. Original cost virtually zero because her husband (with others) set the company up in the first place

Not sure of the CGT tax position and potential reliefs?

I assume the shares come over to my client at the husbands original cost (ie zero) and her gain before reliefs will be 134,596.

She will get her annual allowance and her self employment income is very low so she will get quite a bit taxed at 18% the rest at 28%.

But will she be able to claim entrepreneurs relief or would that only be available to her ex husband .. are there any other reliefs to consider?

Any guidance would be much appreciated

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By johngroganjga
27th Apr 2015 11:11

The wife will be entitled to ER if she meets the conditions.

Is the company a trading company? Presumably yes. or else the husband would not be entitled to ER either.

Has she held the shares for more than 12 months? Apparently so.

Does she hold more than 5%? Not clear..

Was she an employee of officer of the company, or of any subsidiary, for 12 months before the sale? Don't know because you haven't told us.

Was there a holdover election when the shares were transferred to her? If there was, shares came over at husband's original cost. Otherwise shares came over at market value in March 2013 - unless perhaps they didn't separate until after 5 April 2012, in which case they come over at husband's cost anyway.

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By soundadvice
27th Apr 2015 17:40

Thank you John

Very helpful indeed. I will check I have all the appropriate information

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