The 2018 Budget has caused significant concerns for shareholders\nin companies that have multiple share classes carrying different rights and\nentitlements (also known as alphabet shares).<\/p>\n\n\n\n
The new proposed rules change the definition of \u2018personal company\u2019\nin the ER legislation in such a way as to prevent shareholders in a company\nwith alphabet shares from claiming ER.<\/p>\n\n\n\n
On 21 December 2018, the Government proposed a significant\namendment to the Finance Bill rules defining what constitutes a \u2018personal\ncompany\u2019 for ER purposes.<\/p>\n\n\n\n
The revised\nlegislation retains the old qualifying criteria (that the shareholder must have\nat least 5% of the ordinary share capital of the company and 5% of the\nvoting rights) but adds in two new conditions, at least one of which will need\nto be met:<\/p>\n\n\n\n
AND\/OR<\/strong><\/p>\n\n\n\n Additional provisions set out the process for determining whether\nthe second test is met at any one time. The legislation does not define\nthe term \u2018proceeds\u2019, which implies that it may extend to some payments made to\ndebt-holders on a sale of a company.<\/p>\n\n\n\n In its rationale for making the changes, the Treasury has stated that it has laid these amendments to ensure that the conditions for benefitting from the relief operate as intended and to continue \u2018supporting enterprise creation and growth in the UK.\u2019<\/p>\n","protected":false},"excerpt":{"rendered":" The 2018 Budget has caused significant concerns for shareholders in companies that have multiple share classes carrying different rights and entitlements (also known as alphabet shares). The new proposed rules change the definition of \u2018personal company\u2019 in the ER legislation in such a way as to prevent shareholders in a company with alphabet shares from … <\/p>\n