The Autumn Budget included an important change to CGT entrepreneurs’ relief (ER) which extended the five percent qualifying requirements beyond just voting rights and ordinary share capital (tests that were, and remain, relatively straightforward to apply) to a third test imported from elsewhere in the Taxes Acts and focused on entitlements to profits and rights to net assets. 

The policy driver behind the extended five percent qualifying requirement was straightforward – the previous tests did not limit ER to shareholders who had a substantive five percent plus equity interest in the company – nominal value and voting...