Entrepreneurs Relief At Risk

Autumn Statement Entrepreneurs Relief At Risk.

Given the Chancellor's Autumn Statement next week, speculation is now starting to circulate as to areas that the government can save yet more money.

According to reports in newspapers and various online news agencies, Entrepreneurs Relief is possibly on the government's radar for reform.

What is Entrepreneurs Relief?

Business owners can sell interests in trading businesses with profits up to £10 million and only pay 10% capital gains tax rather than the usual rates of capital gains tax at 18% for some but the majority taxable at 28%. The relief was introduced to encourage people to develop businesses. Thousands of people each year sell their businesses or their business interests for £1 million plus.

When we do the numbers, if you look at a business share that has been sold for £1 million this means that you would potentially pay tax of £100,000 rather than £280,000. It has been estimated that the cost to the taxpayer in lost tax revenue in 2008/9 was £360 million but this had rocketed to around £3 billion per year.

Speculated changes to Entrepreneurs Relief

Most people agree that entrepreneurs relief will remain as people need to be encouraged to develop and grow their business thus creating employment and tax revenue.

Some suggest that the rate of entrepreneurs relief currently at 10% will be increased. Others suggest that the £10 million On business gains will be reduced.

Given the government's pre-election pledge of not increasing income tax, national insurance rates and VAT until 2020, the so-called "triple lock", capital gains tax is firmly on the agenda.

We agree that there is a likelihood of change for capital gains tax but we also suggest there the possibility of introducing new taxes, wealth tax similar to that charged in other European nations has not been mentioned for some time. Likewise, mansion taxes have not been mentioned and a change to stamp duty is a distinct possibility given that the property market is yet again warming up and the government can only win with revenue from property sales.

Finally, tax relief on many items such as Private pension contributions, venture capital trusts and enterprise investment schemes are distinct possibilities.