Entrepreneurs’ relief is no more (in name at least).
In the March 2020 budget the government replaced Entrepreneurs Relief with a new watered down version called Business Asset Disposal Relief.
Entrepreneurs Relief can be traced all the way back to Tony Blair’s New Labour victory in 1997 where they introduced a number of measures designed to stimulate jobs and growth by encouraging entrepreneurs to start new businesses, get them up and running – sell them and do the same again!
The relief was designed to be an incentive for entrepreneurs to start a new business by reducing the amount of capital gains tax payable when the time came to dispose of (or sell) certain business assets, where conditions are met.
In reality, the Government clocked onto the fact that less than one in ten entrepreneurs admitted this carrot was tasty enough to entice them to start a new business.
It was an expensive relief, too, costing the taxpayer around £2b a year and benefitting a select few. The Government claimed three quarters of that went to just 5,000 businesses.
Armed with those damning statistics and opinions, Chancellor Rishi Sunak tinkered with the existing relief and gave it the new name of Business Asset Disposal Relief.
In this Active Practiced Update we look at the new relief in detail.
If you would like to learn more about Business Asset Disposal Relief, please do not hesitate to contact us.