By Mel Hackney

Entrepreneurs’ relief (ER) is a relief applied to the sale of certain business assets or shares under qualifying circumstances. The relief is generous; any taxable gain generated is taxed at 10% rather than 18% or 28%. A common example of when this may arise is when closing a company down and extracting funds.

There has been much in the press over the past few weeks about ER being at risk in the upcoming budget, and whether it might be restricted or even abolished altogether.

At this point in time, the implementation options appear to be:

1. The Chancellor will make his Budget speech on the 11 March and it is possible that he will announce immediate changes to ER;

2. The new tax year begins on 6 April, and it is probably more likely that if there is a Budget announcement that it will be effective on disposals after 6 April, (although there might be a provision that also captures transactions from 11 March that have been artificially constructed as an anti-avoidance move)

3. There are no immediate changes, and any change is implemented from a later date following a consultation process (such as Royal Assent for the Finance Act 2020, or 6 April 2021).

As such, until 11 March there is little which we can ascertain. Alternatively, the Government may simply announce a review or consultation process. If you believe that the potential new measures may affect you and would like further information or advice, please do not hesitate to contact us.