People selling their businesses will be able to shield more of their gains from tax if changes announced in today’s Budget go ahead.
People selling their businesses will be able to shield more of their gains from tax if changes announced in today’s Budget go ahead.
Under the changes, vendors will pay the lower rate of 10 per cent on the first £2 million of their proceeds, a doubling of the threshold from the previous £1 million.
The normal rate of capital gains tax (CGT) remains unchanged at 18 per cent, despite expectations that it might be raised to bring it more in line with income tax.
Nick Parker, regional director of tax at accountancy firm RSM Tenon, says, ‘I expected an attack on CGT because of the differential between that and income tax. I was really surprised that [the Chancellor] doubled entrepreneurs’ relief and left CGT at 18 per cent, but it has got to be great news for entrepreneurs.’
However, Parker points out that the changes may not be enacted by a new government.
He adds, ‘The uncertainty is quite worrying for entrepreneurs who are about to sell their business. They now have the difficult choice of whether to go ahead before 5 April under the current tax regime, or risk [a new government] cancelling the planned increase in entrepreneurs’ relief and changing CGT.’
