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Entrepreneurs’ Relief

Q. “My accountant has suggested making my wife a director/company secretary to potentially qualify for entrepreneur’s relief. I was wondering what the implications are of doing so, e.g. would HMRC want to see evidence that my wife is carrying out some work as director and/or company secretary?”

A. For your wife to be able to qualify for Entrepreneurs Relief three conditions must be fulfilled for at least a year before the earlier of the cessation of the business or the disposal of the shares:

  1. The company must be the individual’s personal company. She will therefore have to hold at least 5% of the ordinary share capital;
  2. The company must be a trading company; and
  3. The individual is an officer or employee of the company.

Generally whether a person is an officer or employee of a company or not is dependent upon whether that person has an employment or holds an ‘office’ within the meaning of ITEPA2003/S4 and ITEPA2003/S5 (3). However directors & company secretaries are offices anyhow. There are no specific requirements regarding either working hours or the level of remuneration. The condition is simply that the individual should be an officer or employee.

By Contractor Doctor


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