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Entrepreneurs relief trap? - Budget changes

Possible hidden problem with Alphabet shares?

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I was thinking about the Budget proposal to tighten up on the definition of personal company for Entrepreneurs Relief. The draft legislation essentially says that the individual needs to be benefically entitled to 5% of the distributable profits.

How will this work with alphabet shares that we see so often?  For example in a company with 100 issued shares, Director A holds 50 class A equity shares and Director B holds 50 class B equity shares and the company may pay dividends in whatever proportion is agreed.  It seems to me that neither class of share is entitled to 5% (e.g. there may be no dividend paid on class B this year) in which case neither class of shares qualifies for ER.  Am I reading too much into this, or is there a real problem here?


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01st Nov 2018 18:09

Whilst the changes to ER are unwelcome to many, Investors Relief will give many some comfort.

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05th Nov 2018 10:30

Yes there is a real problem there. See my article

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to Rebecca Cave
05th Nov 2018 13:26

Rebecca, your article doesn't mention alphabet shares. What is your view on them?

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