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Entrepreneurs Relief - Investment Company

Does a company trading shares an investments qualify?

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We have c client who is looking to set up a company to trade and hold investments of approximately £100,000. The money will come from a loan from his other trading company. The plan is for the investments to accumilate and make a profit over a number of years at which point these will be withdrawn and put into a pension fund.

I have advised the client that I do not think the company would qualify for Entrepreneurs Relief as it is not a trading company, however the client has said they think it is and has sent a link by some "trading guru".

Could anyone confirm if this company would qualift for ER? My other concern is that if tha original trading company's only income ends up being loan repayments from the investment company, then this could also lose its ER qualifying status?

Thanks.

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By Tax Dragon
03rd Oct 2019 09:42

Care to share the link? I could do with a laugh.

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By Clinton Lee
03rd Oct 2019 10:16

I, too, would love to see what this "trading guru" is advising!

Maybe this has something to do with the 2016 reform to substantial shareholding exemption?

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By alan.rolfe
03rd Oct 2019 10:37

Try: https://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk//man...
don't know if there is a more current version of this.

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By Accountant A
03rd Oct 2019 10:52

Sounds like alottatosh not littletosh. Even if ER was applicable, there is still tax to be paid. Why not put these (guaranteed profit) investments in a SIPP on Day 1 and pay no tax.

How is he planning to put £100,000 (plus 'accumilated' profits) into his pension without AA/LTA issues?

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