It’s a short Tax Tuesday today, but potentially a very important one nevertheless. The word circulating within the tax industry at the moment is that Mr Javid is about to take a hatchet to Entrepreneurs’ Relief (ER) – and change it “significantly”.

Sometimes these sorts of rumours can appear unfounded, even hysterical. This time, though, it looks and feels like our fears will be realised. They may well be based on a leak from a reliable source. Tax Tuesday’s view is that the prospect of a major curtailment of ER is not at all out of kilter with this government’s instincts. This is possibly not what we might call a “traditional” Conservative government and it might value the message which a change to ER could send out to its newer, post-Brexit audience.

ER is a 10% rate of CGT and has been with us since 2008. At first it applied to an individual’s accumulated eligible lifetime gains of £1m. To the surprise of our industry, that lifetime gain limit bounced up to £2m, £5m and then £10m, in extraordinarily quick order. We have always been aware that it could bounce back down again, at least as quickly. A journalist writing in the FT at the weekend predicted that we will go back to the starting level of £1m on March 11th. We couldn’t possibly dismiss this prospect, even if we hope that any change is not that severe. Changes might, of course, come in other (or additional) ways: the qualifying ownership period might be extended further (beyond the current two year period) or the scope of eligible gains could be narrowed in a range of ways.

In the meantime, there are things which might be done for those owners wanting to explore their ability to preserve the benefit of the very favourable current regime. This is especially relevant, of course, for those looking at short term disposals, for which a planned, accelerated arrangement, might be “safe” (ie those sellers might not be at undue risk of generating a tax charge which they can’t quickly fund out of the proceeds of their onward external sale).

For those owners who are concerned about the implications of an imminent reduction or restriction in the scope of ER and who are interested to explore the means by which we might preserve the reliefs we have today, please contact your relationship principal here or email our Tax Partner, Chris Barrington.

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