With the Budget scheduled to take place on Wednesday 11 March, business owners who have considered selling their business should be aware that Entrepreneur’s Relief is reportedly under threat. The Conservatives pledged to “review and reform” Entrepreneurs’ Relief as part of their recent election manifesto, adding “… some measures haven’t fully delivered on their objectives.”
Entrepreneurs’ Relief gives individuals a 10% rate of capital gains tax on lifetime gains of up to £10m raised from business disposals, as long as certain qualifying conditions are met.
It has been suggested that the Government may have been influenced by the Institute for Fiscal Studies (IFS) who indicated that not taxing these capital gains at the full rate of 20% was costing the Treasury in excess of £2bn per annum in tax.
Reforms effective since 6 April last year increased the holding period for qualifying shares from one year to two years and revised the minimum 5% shareholding requirements to include a 5% economic interest test too, however it has now been suggested that these reforms did not go far enough.
Anyone considering a business sale, buyout or succession in the short term may wish to accelerate thoughts to protect their position!
If you would like to discuss, or require assistance, please contact our Tax Teams on 01788 539000 or 0116 261 0061.