Originally written by Timothy Adler on Small Business
Sajid Javid, the chancellor, may guillotine Entrepreneurs’ Relief instead of scrapping it completely, following protests from entrepreneurs.
According to the Sunday Times, Sajid Javid may shut off Entrepreneurs’ Relief for new businesses in next month’s Budget instead of scrapping the tax break completely.
And the tax break for entrepreneurs selling their businesses would be capped at £1m worth of capital gains tax to pay instead of the current £10m.
Entrepreneurs’ Relief halves the amount of CGT business owners must pay when they sell up, from 20 per cent to 10 per cent on sale.
Introduced by Gordon Brown’s government, the idea was that entrepreneurs would reinvest in their companies rather than sell out when they can.
However, Treasury officials see Entrepreneurs’ Relief as a tax loophole and want to shut it down completely. Prime minister Boris Johnson claimed the £2.4bn-a-year tax break served only to make the “staggeringly rich” even wealthier.
In October the Institute for Fiscal Studies criticised Entrepreneurs’ Relief for just rewarding owners already selling their businesses, rather than encouraging them to reinvest in another start-up.
The Association of Accounting Technicians (AAT) went further, calling for Entrepreneurs’ Relief to be scrapped and that the £3bn or so the