Entrepreneurs Relief (ER) reduces the rate of CGT on disposals of certain business assets from 20% to 10% for the first £10m of the Capital Gain for qualifying assets. This can result in a tax saving of up to £1m. 

The 2018/19 Finance Bill contained draft legislation outlining the two important changes to ER introduced in the 2018 Budget. There is now wide-spread speculation that ER will be significantly tweaked from 11 March 2020. 

The changes will affect business owners and their management teams. In practice, the changes will reduce the number of shareholders entitled to claim ER, and create additional complexity in determining whether claims are valid. This will also affect business owners who were thinking of or who are going through a Members Voluntary Liquidation (MVL) process in order to release investments or exit the whole business in a tax efficient manner. 

It is expected that these changes could be a first step prior to more significant changes which could mean less relief when retiring or selling a business.

Hayley Simmons, Head of Insolvency & Advisory for Shaw Gibbs comments:
“Whether owners are thinking of selling due to retirement or because they are moving onto a new entrepreneurial venture, the suspected changes to Entrepreneurs Relief will have a huge impact on the tax savings currently available. It is likely the review will reduce, not extend, the existing benefits for entrepreneurs. Our advice to those contemplating retirement or a sale of all, or part of their business is to contact us to explore the options”

How Shaw Gibbs can help

Shaw Gibbs are a top 100 accountancy practice who specialise in advising owner managed businesses and private individuals in the Thames Valley, The Chilterns and London.We have a large experienced insolvency team who are in a position to help in all situations that involve or touch on insolvency or corporate recovery. We also have the back up of our accountancy, corporate finance and business advisory practice to help advise business on a whole host of matters including; tax planning, accounts and audit and financial planning.