13 January 2021
It is thought that the tax break available to entrepreneurs, in respect of which the lifetime limit was reduced from £10 million to £1 million last year, may be abolished completely.
Key changes to Entrepreneurs’ Relief
Entrepreneurs’ Relief, now called Business Asset Disposal Relief (“BADR”), currently affords entrepreneurs a reduced rate of Capital Gains Tax (“CGT”) when they sell shares in their company (“business assets”). The current CGT rates are 10% on the disposal of qualifying business assets, provided the basic rate of income tax is available, and 20% thereafter.
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Alastair Dunn |
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Ibinabo David-West |
At present, BADR on disposals on or after 11 March 2020 will only apply to the first £1 million of qualifying gains. It is important to note that previous claims are taken into account, so if £800,000 has already been claimed, only the first £200,000 of qualifying gains after 11 March 2020 would qualify.
While no one knows exactly what the Spring Budget holds, if you are thinking of selling your business and want to bag the relief while it is still available, the message is to act quickly.
This is particularly the case for trade sales, where time is running out to complete a sale from scratch in the available time. There may also still be the opportunity to consider family succession or a sale to employees.
For more information or legal advice on selling your business please contact our Corporate team.
Contacts
Alastair Dunn Partner akd@bto.co.uk / 0141 221 8012
Ibinabo David-West, Trainee Solicitor ida@bto.co.uk / 0141 221 8012