Changes to Entrepreneurs’ Relief

Published on 6th December 2019

The Conservatives have stated in their manifesto for the 12th December general election that they will “review and reform Entrepreneurs’ Relief”, as it is one of the tax measures that has “not fully delivered on [its] objectives”.

James Austen TEP of Collyer Bristow commented, “affected business owners – especially those looking to dispose of their business in the near future – should seek tax advice as soon as possible.”
This statement could suggest that the conditions to obtain relief will be made significantly more difficult or that it will be abolished in its current form.

Further, it is unclear whether any changes would be brought in immediately as whilst it has been inferred that a major budget will occur in February, it may be that the predicted Entrepreneurs’ Relief changes could occur immediately post-election.

As such, if a deal is in progress, then it may be sensible to try and reach exchange by 11th December 2019, if you are looking to maximise chances of a 10% tax rate.

Options to try and achieve the current 10% rate are:

  1. Ceasing a sole trade now and transferring the trade and assets that are continuing in use to a company or other special purpose vehicle (such as a trust).
  2. Using rescindable contracts that are dependent on certain events occurring.

It doesn’t sound like the Entrepreneurs’ Relief is going to be abolished in its entirety, but certainly some changes are expected.

If you have any concerns about the possible upcoming changes to Entrepreneurs’ Relief, then please do not hesitate to contact us.