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Budget Changes Entrepreneurs Relief 0207 145 0 040   enquiry@business-partnership.com

Budget Changes to Entrepreneurs’ Relief -

How does it affect the sale of my business?

There has been much debate over new chancellor Rishi Sunak’s first Budget and among the hottest topics for business owners is what the future would hold for Entrepreneurs’ Relief.

This UK tax scheme designed to incentivise people to grow a business has come under the radar of politicians in recent months.

With other priorities for the Government – not least its response to the Coronavirus outbreak – the chancellor has opted to retain Entrepreneurs Relief, but the lifetime allowance will be drastically reduced from £10 million to £1 million. 

How does ER work?

Introduced in 2008, Entrepreneurs Relief reduced Capital Gains Tax payable on the gains made from selling a company. Effectively halving the usual 20% to just 10% on the lifetime allowance. It is that lifetime allowance whch has reduced from £10 million and is now £1 million.

The 10% rate is applied regardless of your income level or rate of Income Tax you pay and there is no limit to how many times you could claim within the lifetime allowance (now £1m).

Entrepreneurs Relief is subject to the following conditions:

  • The business must have been trading in the 24 months leading up to the date when the shares were sold

  • The person disposing of the shares must be an officer or employee of the company in question and own at least 5% of the ordinary share capital of the business

How can I keep my business sale on track?

At Business Partnership we firmly believe that your business exit and a comfortable retirement shouldn’t fall victim to the ever-changing political or economic landscape.

Don’t let the tax tail wag the commercial dog – the most important considerations in any business sale are you, your retirement, your family and the future status of your employees.

In our view, the best way to shield yourself from the winds of change is by building a valuable business and to have a proper exit plan in place.

Well managed, sustainable businesses that work without the owner provide them with a choice of when - and how - to exit achieving the best outcome for all concerned.

It is also worth considering that a business can increase its value by an average of 71%, if properly prepared for sale, much more than the tax allowance just lost.

This is where Business Partnership can help. Support from our experienced Regional Partners, given alongside your business advisors including IFAs and accountants, can ensure your business exit strategy meets your goals – when you need it to.

For more information, find your nearest Regional Partner at www.bp-corporate.com/our-offices call 0207 145 0040 or email enquiry@bp-corporate.com

Alternately, our free and confidential Value Builder™ survey can tell you how valuable your business is - and perhaps most importantly how to grow your business value before you sell.

Visit www.bp-corporate.com/value-builder and watch our short video to find out more about the benefits before completing our questionnaire. You’ll receive a Value Builder Score™ out of 100, along with guidance from your Regional Partner on how to interpret your results and increase your value.


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