As forecast – goodbye Entrepreneurs Relief for more than £1 million gained

So as expected, the axe has fallen on ER (at least in part). It remains to be seen whether the Exchequer will receive the £6bn it expects, or the change will encourage business owners to start looking towards avoidance measures again.

Thankfully, CGT is no longer 40%, which saw scores of vendors exiting via Belgium to avoid paying a hefty tax bill. The tax take reportedly went up when ER was introduced as avoidance all but stopped. With CGT currently at 20%, it’s possible that the difference of 10% will not be enough to trigger avoidance measures.

The good news for larger management teams is that ER relief up to £1m remains, and is applicable per eligible shareholder. For family businesses, now might be the time to look at share structures in order to maximise the benefits of the £1m relief limit.

As ever, we have plenty of ideas on how to maximise this opportunity.

This reflects that the majority of the cost of Entrepreneurs’ Relief is generated by a small minority of very affluent taxpayers’ gains.

By Charles Whelan on 11/03/2020