Insights 23.1.20 Author: Thomas Adcock

Entrepreneurs’ Relief: What possible actions could you take now?

Insights 23.01.2020 Author: Thomas Adcock

Thomas Adcock, Tax Partner at CBW, takes a look at the future of Entrepreneurs’ Relief ahead of 11th March and what action you can take now.

In the run up to the election, all of the parties made remarks about the future of Entrepreneurs’ Relief. The identity of the eventual winner gave many comfort, that, whilst it may be reviewed, it would not be abolished. However, on Friday, Boris Johnson said the following when speaking about Entrepreneurs’ Relief:

“I have to tell you, the Treasury is fulminating against it because there are some people who are staggeringly rich who are using that relief to make themselves even more staggeringly rich.”

Leaving aside for a minute Boris’ penchant for using archaic language – I cannot be the only one who had to reach for a dictionary on fulminating? – this statement will have dissolved a lot of that comfort.

If Entrepreneurs’ Relief were abolished, then all gains on the sale of businesses that would have otherwise qualified for Entrepreneurs’ Relief would be taxed at 20% and not 10% as is available under Entrepreneurs’ Relief for the first 10 million of qualifying gains. This, of course, assumes that the rate doesn’t change – which it may do.

If you are a believer that Entrepreneurs’ Relief will be abolished, then you are left with two questions:

  • Does the increase in rate matter to me?
  • If it does, what can I do about it?

We cannot answer the first question, but we can provide advice and support on the second.

If you are in the process of selling your business, then it seems to be a no brainer to do all you can to accelerate the sale so that it happens before 11 March, which is the date of the Budget. If not, then you should be considering if there is a way to trigger a disposal for capital gains purposes to lock in the availability of the relief.

We can, of course, help with both and would be delighted to discuss this with you.

What next?

If you have any concerns or questions regarding the future of Entrepreneurs’ Relief and how this could affect you, please contact Thomas Adcock who will be able to assist you further.