The Association of Taxation Technicians (ATT) is calling on the Government to reconsider its rebranding of Entrepreneurs’ Relief as Business Asset Disposal Relief. The ATT is concerned that the re-naming will confuse taxpayers and their advisers by suggesting that the relief will be more widely available than its conditions permit.
The Finance Bill published yesterday includes the provision to reduce the lifetime limit for Entrepreneurs’ Relief from £10 million to £1 million. What has come as a surprise is the decision to change the name of the relief to Business Asset Disposal Relief.
Jeremy Coker, President of ATT, said:
“This is a situation where the relief needs to do what it says on the tin.
“Entrepreneurs’ Relief, as we have known it since its introduction in 2008, reduces the rate of capital gains tax payable on a gain arising to an individual on their disposal of a business or a part of a business or shares in a business. It can also apply where assets are disposed of following the cessation of a business.
“But Entrepreneurs’ Relief has never applied to the disposal of the assets of a continuing business. There must be a disposal or cessation of at least part of a business.
“We are concerned that re-naming the relief as Business Asset Disposal Relief will make taxpayers and their advisers think that it is available when it is not. For example, an individual who sells their business premises - an asset - and moves their business into rented premises might well expect the relief to apply. They would not, however, have made a qualifying disposal of a business or part of a business.
“It is the use of the word ‘asset’ in the name which will cause the confusion. It is probably quite a good idea to re-name Entrepreneurs’ Relief to emphasise the radical reduction in the lifetime limit for the limit but it is no more sensible to mislabel a tax relief than a tin of beans.”
Notes for editors
1. The change is provided for in Schedule 2, paragraph 7(1) of the Finance Bill – see page 92, which says:
“7 (1) In section 169H(1) of TCGA 1992 (relief under Chapter 3 of Part 5: introduction), for “to be known as “entrepreneurs’ relief”” substitute “to be known as “business asset disposal relief” ”.
The relevant Explanatory Note says in paragraph 27 on page 49:
“Paragraph 7 amends section 169H(1) of TCGA 1992 so that the relief is to be known as “business asset disposal relief” instead of “entrepreneurs’ relief”. It also makes consequential amendments to other references within TCGA 1992 to “entrepreneurs’ relief” or “ER relief”; and provides that the change in name has no effect of the operation of the relief.”