The relief, which allows entrepreneurs to pay CGT at 10 per cent on the first £2 million of their profits on selling their business, will now be applied to the first £5 million of lifetime gains.

However, all payers of higher rate income tax, including entrepreneurs, will now pay CGT at 28 per cent rather than 18 per cent. The lower rate of 18 per cent will remain for basic rate taxpayers.

Paul Webb, a tax partner at the Robert James Partnership, says the extension of entrepreneurs’ relief was the ‘biggest shock in the budget’, and will help the economy recover.

Webb adds, ‘It gives entrepreneurs enough of an incentive to keep driving their businesses forward for the next few years and build them to a substantial size. For example, if you have two shareholders and you sell your business for £10 million, you’ll pay the lower rate on all of your gains.’

The increase of CGT to 28 per cent for higher rate taxpayers was better news than many had hoped for, with a rise to 40 or even 50 per cent having been widely expected. David Brookes, a tax partner at accountancy firm BDO comments, ‘It will come as some considerable relief to many entrepreneurs holding assets with latent capital gains that the rate was not increased in more in line with employment income, as had been widely reported in the press.’