Business owners using Entrepreneurs’ Relief to exit hits record high
As rumours mount that Obsorne will scrap the tax relief scheme in the Autumn Statement, research shows 43,000 UK entrepreneurs used the relief in 2014
The number of business owners using Entrepreneurs’ Relief – the incentive which allows entrepreneurs to pay less capital gains tax when they sell their business – hit a record high of 43,000 last year, according to research by accountants Moore Stephens.
There was a 27% jump, up from 37,000 in 2013, in the number of small and medium-sized enterprise owners who made use of the scheme; an indicator that more entrepreneurs view the relief as a way to grow their businesses.
Introduced in 2008, Entrepreneurs’ Relief reduces the amount of capital gains tax to be paid on the sale of a business from 28% to 10%, on a life time limit of £10m. It is estimated to have saved small business owners £2.7bn in 2013-2014 and is projected to rise to £3bn across 2014-2015.
Despite the fact that an increasing number of small business owners are capitalising on the scheme, there has been heavy speculation that chancellor George Osborne will “curb the generosity” of Entrepreneurs’ Relief in tomorrow’s Autumn Statement.
Timothy Fussell, partner at Moore Stephens, commented: “Entrepreneurs’ Relief is a tempting target for a chancellor looking to increase revenue without raising taxes.
“Cutting Entrepreneurs’ Relief could be seen as an easy way for the Treasury to boost revenues without necessarily attracting much political opprobrium, as it could be perceived that it only affects the rich.
“However, through encouraging small and medium enterprises to grow, Entrepreneurs’ Relief helps create jobs in the UK. Removing incentives for businesses owners to take risks’, and invest in their businesses would be very unwelcome.”