Entrepreneur’s Relief has been an important tax break for business owners, allowing them to reduce their Capital Gains Tax liability on qualifying assets (which may be their shares in a business, or assets that they have lent to their business) to only 10%. Entrepreneur’s Relief can also apply to Trustees selling assets from a Trust.
However, following the Conservative victory in December’s General Election, the indications are that Entrepreneur’s Relief may be about to disappear, or at least be reduced. In their election manifesto, the Conservatives indicated that this tax break had not had the effect that they wanted and gave a commitment to “review and reform Entrepreneurs’ Relief”. Whilst manifesto commitments are not always delivered, the Chancellor is likely to be under pressure to find additional tax revenue to off-set the expected economic impacts of leaving the European Union’s Single Market and Customs Union, and the expected transition to a low-alignment relationship with the EU. Some uncomfortable choices will have to be made, and those usually tend to be made at the beginning of a parliamentary cycle rather than the end, in the hope that they will be forgotten or forgiven by the end of the 5 year cycle. The first opportunity for the Chancellor to deliver on his manifesto promise, and to stuff the Government’s piggybank, will be the upcoming Budget, scheduled for March 11th , and accordingly Entrepreneur’s Relief may not be long for this world.
Business Owners who want to take advantage of this relief may therefore need to move quickly.
Entrepreneur’s Relief may affect business owners considering any form of capital realisation event, whether a share sale to a third party, a shareholder restructuring or retiring a family member from a business. Allan Janes LLP have vast experience of business and asset sales, share restructurings, shareholder exits and share buybacks.
In conjunction with your tax advisors, Allan Janes can assist in advising on, documenting and effecting your share or asset disposal, and are used to operating to tight deadlines. For further details contact our Corporate Partner, Iwan Emanuel, on 01494 893 570.