Originally written by Timothy Adler on Small Business
Small business has asked chancellor Rishi Sunak not to renege on the Conservative election manifesto promise to reform, not scrap entrepreneurs’ relief.
The Treasury is said to want to abolish the £2.7bn tax break in the March 11 Budget in order to fund pay for nurses and police officers and for projects that could help “level up” the north and the south.
The relief allows business owners to pay a 10 per cent rate of capital gains tax when they sell their companies, compared with the usual 20 per cent. It usually applies to gains of up to £10m. Entrepreneurs’ relief was introduced in 2008 by Alistair Darling to encourage people to start or back new companies.
The cost of the relief has risen from £427m in 2008-09 to £2.7bn in 2018-19.
However, the Federation of Small Businesses, has hit back at the Sunday Times report that the chancellor will scrap, not reform, entrepreneurs’ relief. Previously, former chancellor Sajid Javid was mulling scrapping entrepreneurs’ relief for start-ups but keeping it on for existing business.
Only around 10 per cent of people who claim entrepreneurs’ relief are selling businesses worth more than £1m, says the FSB. And the vast