Brexit is done. A Budget looms. Only a select few know what it will contain, but some clues can be found for those who look.
Perhaps the biggest clue is a possible change to Entrepreneurs’ Relief (ER). Within the Conservative election Manifesto was a promise to review ER. It is apparently unsustainable in its current form, “costing” the Government £2.7bn per year. A cost that it isn’t prepared to pay when the relief isn’t achieving what it was originally created to achieve.
Halving the Capital Gains Tax paid on the sale of businesses from 20% to 10% where the conditions are met, Entrepreneurs’ Relief is designed to promote an entrepreneurial attitude and to encourage new business without the fear of a huge tax bill on exit. The Government’s current view is that this now just rewards those who have made their fortune – making the rich richer.
What will this mean for the future ER? We obviously don’t know, but history tells us if any changes are made they will take effect on Budget day (11th March). No notice period to take countermeasures.
For those that have spent their lives building up their business with the anticipation of a relatively painless exit, there is of course a risk of this being ripped out from under you. Indeed for some, after allowing for a retention, and paying off the bank loan there may be no payout left.
Clearly ER is important, especially so given the buoyant market we all operate in.
We are pleased to be able to deliver a method of banking ER before The Budget hits.
The budget is less than 5 weeks away though, so time is against you.
If you were banking on ER when you sell, give us a call before the 19th February to bank it now.