Along with Sajid Javid’s shock resignation, there are other rumblings coming out of Number 10.
As part of the Government’s 2020 vision, there are noises being made that the highly controversial 10% rate (Entrepreneur’s Relief “ER”) on business disposals will be scrapped or replaced in the upcoming Budget.
What does this mean?
Businesses up and down the country considering an exit strategy via Members’ Voluntary Liquidation or a business sale will need to consider the impact on any sale that changes to ER may make. Currently, qualifying company shareholders can sell shares at a gain and pay only an effective 10% tax on their holding. This could make sales post April 2020 much less attractive.
Why is this happening?
The Conservative government in their General Election in December 2019 manifesto promised to review and reform Entrepreneurs’ Relief as part of a broader vision to “redesign the tax system so that it boosts growth, wages and investment and limits arbitrary tax advantages for the wealthiest”. And, recently, in a local meeting last month, PM Boris Johnson suggested to a group of entrepreneurs that the tax break was making some already rich people “even more staggeringly rich”.
We don’t know what is exactly being planned by the government but there are rumours abound regarding measures to abolish Entrepreneurs’ Relief completely when the Budget is delivered next month. So we will have to wait until 11th March to find out for certain what the future holds.
What should you do?
If you are considering exiting their business through a sale or MVL, you potentially only have a matter of weeks to take advantage of Entrepreneurs’ Relief. We recommend you seek professional advice to consider your options and take action sooner rather than later.
For further information, please call 0114 275 6292 or email firstname.lastname@example.org.