Osborne urged to bring back Taper Relief in Summer Budget

Is the old tax relief, scrapped in 2008, due a comeback?

Chancellor George Osborne could replace Entrepreneurs’ Relief  with former tax break Taper Relief, according to Prelude Group founder Duncan Cheatle.

In an exclusive chat with Growth Business Cheatle said he would favour the reintroduction of the Taper Relief as it is “less complex” than the incentives currently on offer to entrepreneurs and start-ups.

Taper Relief was replaced by Entrepreneurs’ Relief in 2008. It was originally introduced in 1998 to encourage long-term investment in growing businesses. It reduced the amount of Capital Gains Tax paid by either an individual or a business on certain assets.

For businesses the rate of relief could be as high as 75% after a “holding period” of two years (or 10 years for an individual). Entrepreneurs’ Relief offers the same benefits except with a cap. 

“It would be good to see some adjustment to Entrepreneurs’ Relief,” Cheatle said. “The simplest way to do this would be just  to return to straight Taper Relief. Under the current system, which is overly-complicated, people who genuinely should be able to apply for it don’t because it’s been diluted too much.”

Cheatle is not opposed in principle to Entrepreneurs’ Relief, and his lobbying – along with others – helped to to bring it in as a compromise when taper relief was abolished. But he still believes there are certain issues around it.

“It gets to the point where we want entrepreneurs to really scale up their business, but when they’ve used up their £10m allowance they suddenly pay three times more tax. It doesn’t seem like a very sensible way to encourage them to carry on,” he said.

While Cheatle admits that he “doesn’t expect a change to what we have”, he says he would be “delighted” if something closer to the old model were introduced.

Further reading: We need to get CGT right

Praseeda Nair

Praseeda Nair

Praseeda was Editor for GrowthBusiness.co.uk from 2016 to 2018.

Related Topics