The Association of Taxation Technicians (ATT) welcomes the Chancellor’s decision to preserve Entrepreneurs’ Relief – albeit with a very substantially reduced lifetime limit.
Jeremy Coker, President of the ATT, said:
“There has been some form of preferential tax treatment on the disposal of businesses ever since the creation of Capital Gains Tax (CGT) back in 1965. Over the years, we have seen Retirement Relief, Business Asset Taper Relief and Entrepreneurs’ Relief – all with their own complexities and anomalies.
“The decision to scale back the lifetime limit of Entrepreneurs’ Relief from £10 million to £1 million1 is understandable. Compared to the predicted alternative of complete abolition of the relief, this decision will be welcomed by the vast majority of those likely to be eligible. The chance of making lifetime capital gains of over £1 million on business disposals was never more than a pipedream for them in the first place.
“What is needed in relation to long-term reliefs connected with business disposals such as Entrepreneurs’ Relief is stability so that taxpayers know what taxes are likely to be incurred when they come to dispose of an interest in a business. If the price for that certainty is a more realistic lifetime limit, that is likely to be seen as a price worth paying."
Notes for editors
1. The reduction in the lifetime limit from £10 million to £1 million applies with immediate effect. Gains that are eligible for Entrepreneurs’ Relief are taxed at a preferential 10% rate of Capital Gains Tax instead of 20% (or 18/28% if residential property is involved).