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What is Entrepreneurs’ Relief?
To put it briefly, Entrepreneurs’ Relief is a tax relief which allows qualifying business owners to pay 10% capital gains tax, rather than 20%, when they dispose of all or part of their business. The legislation has been in place since 2008 and has helped many entrepreneurs pay less tax on their exit from a business, freeing up essential funds for them to reinvest into new ventures or help to provide a retirement pot for the future.
Entrepreneurs’ Relief may be claimed by individuals who sell shares in a trading company, or dispose of all or part of an unincorporated business, provided certain conditions are met. The specific conditions vary depending on the type of disposal. Qualifying capital gains are subject to a lifetime limit of £10 million.
What could happen if the relief is scrapped?
Entrepreneurs’ Relief is very valuable; if it were scrapped tax bills on exit from a business would double. A tax increase of this magnitude could potentially discourage entrepreneurs from developing businesses, having a negative impact on the economy. Until the government devises some suitable alternative, it seems unlikely that Entrepreneurs’ Relief will cease to be available.
Entrepreneur’s relief can prove to be quite complex, our award winning tax team has been working with businesses claiming this relief for many years and can assist you with any questions you may have. For more information please submit an enquiry or contact me on the details listed above.
Join us for our Budget event on Tuesday 30th October - Held in both Newbury and Southampton - to hear from our experts on the outcome of Entrepreneurs' Relief and more. Register here.