Entrepreneurs's relief: multiple beneficiaries

Special provisions apply where on a disposal of trust business assets there is at least one other beneficiary in addition to the qualifying beneficiary who, at the material time (see below), has an interest in possession in either the whole of the settled property, or a part of it which consists of or includes the settlement business assets disposed of7. The aggregated gains and losses8 are apportioned by reference to the qualifying beneficiary's interest, at the material time, in the income of that part of the settled property that comprised the settlement business assets disposed of9. The relevant proportion of the aggregated gains and losses so calculated is to be taken into account for entrepreneurs' relief and the remainder of the amount which does not qualify for relief is a chargeable gain10. The “qualifying beneficiary's interest” in the income means the interest by virtue of which he is a qualifying beneficiary, and not any other interest he may have11.

In the case of a disposal of shares or securities (or interests therein) the “material time” means the end of the latest period of one year which ends not earlier than three years before the date of the disposal and throughout which—

•	  (i)     the company is the qualifying beneficiary's company and is either a trading company or the holding company of a trading group; and

•	  (ii)     the qualifying beneficiary is an officer or employee of the company, or one or more of the group companies12.

In the case of a disposal of assets (or interests in assets) used or previously used for the purposes of a business the “material time” is the end of the latest period of one year ending not earlier than three years before the date of the disposal and throughout which the business is carried on by the qualifying beneficiary13.

The aim should therefore be, wherever possible, to separate out business assets into a sub-fund in which only the qualifying beneficiary has an interest.