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11 November 2019
In what is becoming a near-annual sport, there are again renewed calls for the restriction or outright abolition of CGT Entrepreneurs’ Relief.
The latest high-profile support for the move comes from Sir Edward Troup, previously the head of HMRC, in response to a campaign launched by the Guardian newspaper.
Such reports are always unsettling for business owners who are in the process of (or at least contemplating) the sale of their business.
But how short are the memories of some of those who are contributing to this debate: far from being a give-away for the rich, when Entrepreneurs Relief was introduced in 2008, it represented a significant restriction on tax relief for business owners. Previously, they had the benefit of business asset taper relief and retirement relief (un-capped by value), which gave far greater tax savings in many cases.
This point alone does not answer bona fide and knowledgeable policy objections to the Entrepreneurs Relief regime, but those are – yet – few in number.
Further agitation of this sort is likely to unsettle business owners who had assumed that they would benefit from Entrepreneurs Relief in due course. So what are they to do?
Irrespective of the colour of the next government, big new spending commitments seem likely. These will need to be paid for one way or another. Business owners should not make the mistake of believing that frequent complaints about Entrepreneurs Relief followed by inaction will continue forever. Entrepreneurs Relief costs HM Treasury approximately £2.7bn a year – about three times more than intended when it was first introduced. There are plenty of those in Government, as well as outside, who would like to bring that cost down or eradicate it altogether.
Difficult though it might be for some business owners to accept, the political reality is that trimming or abolishing Entrepreneurs Relief is a relatively easy and low-risk option for a Chancellor in need of funds for high-profile new spending commitments.
So prudent business owners would be wise to pre-empt possible changes to the regime where possible:
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