Originally written by Anna Jordan on Small Business
In today’s Budget, Chancellor Rishi Sunak cut the lifetime limit on entrepreneur’s relief from £10m to £1m. He said that 80 per cent of small business owners will not be affected by the move.
For a round-up of announcements relating to small business owners, read Budget 2020 what it means for small business – analysis and live blog.
‘A missed opportunity’
Though hailed as a ‘sensible reform’ by Sunak, many industry experts wanted to see it abolished altogether.
Phil Hall, AAT’s head of public affairs & public policy, said:
“AAT is pleased that the Chancellor acknowledged many of the numerous negative points that this misnamed relief has, including that fewer than one in 10 entrepreneurs have been incentivised to invest because of it, that its name is misleading and that that 75pc of the £3bn annual cost of the relief goes to just a handful of individuals.
Having acknowledged all of those problems, it’s therefore very disappointing that the Government has failed to scrap it and has instead opted to restrict the relief from £10m to £1m.
There is an overwhelming body of evidence that indicates the relief does not achieve its policy objectives, that it’s extremely expensive, misguided, poorly
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Don’t scrap entrepreneurs’ relief, argue small firms
by Timothy Adler • • 0 Comments
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
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What small business needs from new chancellor Rishi Sunak
by Caroline Plumb • • 0 Comments
Originally written by Caroline Plumb on Small Business
Very little in life surprises these days. Yesterday’s Cabinet reshuffle was a case in point. A few short weeks from the Budget and we have a new chancellor, Rishi Sunak. Really?
Rather than being shocked, instead I wondered more about what this means – in keeping with my company’s core way of thinking, “So what, now what?”.
So, does Sajid Javid’s resignation signal reforms more likely to favour businesses like mine and yours? As the news broke, the pound rose significantly with growing belief in the City a radical spending programme would ensue, less constrained by a chancellor keen to establish his fiscally prudent credentials.
It’s about time small businesses felt protected and valued by a government that has relied heavily on them and the self-employed to ensure years of austerity measures didn’t result in mass unemployment.
There are clearly areas where the Budget next month could move to allay concerns held by restaurateurs, recruiters, retailers and every other real business owner. Fail to do so and I fear the mental health, wellbeing and future financial security of business owners will be at risk.
As someone who started my first business aged 21 in 2000 with no prior
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Sajid Javid may guillotine, not scrap, Entrepreneurs’ Relief
by Timothy Adler • • 0 Comments
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