The Entrepreneur Relief scheme was set up in 2008 by Gordon Brown’s Labour Government to ultimately reduce the amount of Capital Gains Tax (CGT) paid on shares sold in a business.
50% Cut to Relief
With the relief being discredited by many critics, they believe the scheme will be axed in the forthcoming budget. The Resolution Foundation has described the relief as “the UK’s worst tax break” citing that it could generate an additional £2.7bn for the public purse.
Yet, a group of 150 prominent business owners have penned a letter to the Chancellor, urging him not to scrap the relief. Especially when considering the proposed cancelling of plans to cut corporation tax from 19% to 17%.
Are you Eligible for Entrepreneurs’ Relief?
Entrepreneurs’ relief is only available to individuals and not businesses. To become eligible, you will need to meet the below criteria and have done so for the duration of two years:
- You are a sole trader, and officer or partner of a business and held this position for the previous two years.
- If the business is closing then the same conditions apply for ownership, and you must have disposed of the business within three years to qualify for Entrepreneurs’ Relief.
- You have not exceeded the ‘lifetime’ limit of £10m in relief per individual.
- You have held 5% of the voting capital and 5% or more of the share capital of the company
Full details on the Entrepreneurs’ Relief scheme can be found of the official Government website.
Alternatively, speak to your accountant, or financial advisor for further guidance.