NEWS

Entrepreneurs’ relief lifetime limit slashed from £10m to £1m

Published:
27
March 2020

The amount of capital gains tax small business owners can potentially save when they sell their business has been cut by 90% for 2020/21.

Entrepreneurs’ relief allows people to pay a reduced 10% flat rate of capital gains tax on any gain made from selling a business, instead of the typical 20% or 28% rate.

A report from the Institute for Fiscal Studies prior to last month’s Spring Budget suggested around three-quarters of the cost of the relief benefits just 5,000 individuals with an average tax saving of £350,000.

In addition, the Federation of Small Businesses (FSB) claimed that of around 43,000 small business owners who claim the tax break each year, 38,000 have gains of less than £1 million.

Armed with those statistics, the Government has reduced the lifetime limit with immediate effect so entrepreneurs’ relief applies to gains of £1m, down from £10m in 2019/20.

The move is expected to net the Treasury an extra £6 billion over the next five years, while capital gains tax receipts are being tipped to soar to around £15.7bn by 2023/24.

Mike Cherry, national chairman at the FSB, said:

“The vast majority of those who claim entrepreneurs’ relief do so on sums of less than £1m, with an average saving of around £15,000.

“For many entrepreneurs approaching retirement, their business is their pension.

“Entrepreneurs’ relief saves tens of thousands of businesses each year from having their businesses plundered by the taxman at the point of sale – businesses that have paid taxes year after year.

“Reforming the relief to target it at just the first £1m of a business sale, while scaling it back at the top end, could mark a way forward.”

We can talk you through selling your business.

Business news
Finsbury Robinson

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare.

Contact Us

Sign up to our
Monthly Business Newsletter

Sign up to receive our monthly Business Newsletter that will keep you up to date with everything going on in accounting, tax, and finance. 

Finsbury Robinson Services
R&D Tax
Has your company undertaken
any R&D related activities?
Find OUt More
Affected by the
Let Property Campaign?
Find OUt More
Check out our fixed price
Accounting and Business Packages
Find OUt More
Free Book-keeping
Software for all Clients
Find OUt More
Free Auto Enrolment Pensions Advice
Calculate your Contribution!
Find OUt More
Are you aware of the Capital Gains Tax Changes coming?
GDPR Compliance
CAN YOU AFFORD NOT
TO BE GDPR COMPLIANT?
Find OUt More

Sign up to our Monthly Business Newsletter

Find News Articles by Category

News HomeOther Tax, Bursarys & Schemes
Entrepreneurs’ relief lifetime limit slashed from £10m to £1m
To get in touch use our Quick Contact Bar:
Show/Hide

Monday                 8:30AM – 5:30PM
Tuesday                8:30AM – 5:30PM
Wednesday          8:30AM – 5:30PM
Thursday              8:30AM – 5:30PM
Friday                 9:00AM – 12:30PM
Saturday                                 Closed
Sunday                                   Closed

Finsbury Robinson
237 Westcombe Hill
Blackheath
London
SE3 7DW