Entrepreneur's relief and dividends

[Hex]

Not quite. The correct calculation is as follows:-

Capital gain = £100,000
Entrepreneurs' relief reduction (4/9) - £(44,444)
Net Chargeable gain - £55,556
Annual exemption - £(9,600)
Taxable gain - £45,956
Tax @ 18% = £8,272

I stand corrected. So it's not just a flat 10% then, it's a 4/9ths taper relief.

[Bumfluff]

Can you use the Entrepreneurs reflief even if you ran a ltd but your contracts failed IR35 ?

What I'm getting at is if you fail IR35 does the HMRC expect you take all money out as a salary or can you leave some in and then make use of the Entreprenuers relief on that ?

Cheers

[Ruprect]

Can you use the Entrepreneurs reflief even if you ran a ltd but your contracts failed IR35 ?

What I'm getting at is if you fail IR35 does the HMRC expect you take all money out as a salary or can you leave some in and then make use of the Entreprenuers relief on that ?

Cheers

Yes - that's the whole point of it isn't it?

[Bumfluff]

Yes - that's the whole point of it isn't it?

What about then if you have a turnover of £150k, you pay yourself £65k a year which is permy market rate and intend to take the rest as a bonus at year end, but then you decide to close the company, would I be forced to take the bonus money out as salary or could I apply the Entrepreneur relief on this and take it out that way ?

[vhadiant]

What about then if you have a turnover of £150k, you pay yourself £65k a year which is permy market rate and intend to take the rest as a bonus at year end, but then you decide to close the company, would I be forced to take the bonus money out as salary or could I apply the Entrepreneur relief on this and take it out that way ?

Why would you pay yourself such a high salary?

[malvolio]

Why would you pay yourself such a high salary?

He's assuming IR35 caught, so doesn't have a choice.

And as for the bonus payment idea, that doesn't work either, since you have to take 95% of gross contract income as salary: doesn't matter when you take it , but it is salary and not gross profit.

[Bumfluff]

Oh well, thanks Malvolio and Ruprect for clarifying this for me.

[Pegasus]

Hi

If it is capital then you (personally) can apply the Entrepreneur's relief (providing you qualify) and then you only have to pay 10% tax

Any information (or useful links) from which we can find out what are the eligibility criteria for qualifying for Entrepreneurs' Relief?

Suppose I am doing IT contracting outside IR35, for a year (annual revenue of 120K, taking annual salary as 15K, taking dividends upto 40K, and leaving the rest in company account). If I get the company closed after 2 years, will I be eligible for this relief on closing?

Thanks.

[Pegasus]

Any guidance from the learned members, regarding the eligibility for the Entrepreneurs' Relief?

I am sorry if it has already been discussed before. I have joined the forum very recently, and a quick search of the threads also did not yield anything significant!

Thanks.

[Moscow Mule]

Look on HMRC for eligibility. From what you (briefly) say I can't see any reason why not, but IANAA.