Allowing Entrepreneurs’ Relief on gains made before dilution

At present, entitlement to the special 10% rate of capital gains tax may be lost when an entrepreneur’s company issues new shares and as a result causes their personal stake to fall below 5%. The proposal announced at Autumn Budget 2017, as detailed in this consultation, allows an individual in this position to elect to be treated as if they had disposed of their shares and reacquired them at their market value just before the time the company issued new shares. The individual may claim Entrepreneurs’ Relief on that gain either at the time of election, or on a future disposal of shares.