This guidance considers some practical and planning points relating to entrepreneurs' relief. For guidance on the calculation of and qualifying conditions for entrepreneurs' relief, see the Entrepreneurs' relief guidance note.

Spouses' shares

Both spouses and civil partners (hereafter 'spouse') are entitled to claim the relief separately and this offers an opportunity to double the lifetime limit.

Therefore, serious thought should be given to bringing a spouse into the business. For example, a sole trader might bring in his spouse to form a partnership by transferring to the spouse a proportion of the business in return for the spouse performing a limited function in the business. Gains on the eventual disposal of the partnership business would then be spread between the spouses, thereby maximising entrepreneurs' relief.

In the case of a company, one spouse could transfer 5% or more shares to the other spouse who would then work part time for the business. Again, this would have the effect of enabling both spouses to claim the relief on a future disposal of the shares. The key to this type of arrangement is to ensure that the recipient spouse works for the company for at least a year before any future disposal of the shares. This ensures that (assuming all other conditions are met) it will be possible to claim entrepreneurs' relief on a future disposal as it will be a 'material disposal' of 'business assets'.

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