Anything Goes
The budget - what's in it for business

Entrepreneur's Relief

In a welcome bit of support for owners of business and for company sales the Chancellor extended Entrepreneur's relief in the budget last week.   This effectively means that those selling their business will pay only 10% capital gains tax on the first £2M of gains compared with £1M of gains under the initial version of the relief.    PF-budget-box_1214536cThis relief is a lifetime limit per shareholder.   So for example in a business with three shareholders up to £6M of gain may benefit provided each hold >5% of the ordinary shares and that all are offices of employees of the company.  So in that example there is £240k less tax to be paid :-)

As ever there is some more small print - but that's basically it. 

Less wellknown is that assets in use for the purpose of the businses also benefit.   So the entrepreneur who sells a business at a £1M capital gain, and alongside this sells a property used f or the purpose of the business for a further £1M gain - can enjoy the effective 10% CGT rate on both transactions.

So with some recovery in the market - see earlier post on Guarded Optimism - and the propsect of paying less tax its a better time to sell your company than its been for the last 18 months or so.


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