From 3 December 2014, ER will not be available on the disposal of a business and its goodwill to a company to which the seller is related, a transaction that happens frequently, which is designed to restrict unfair tax advantages on incorporation.

This will prevent individuals from claiming ER on disposals of the reputation and customer relationships associated with a business (‘goodwill’) when they transfer the business to a related close company.

Nick Paterno, managing partner of McBrides Chartered Accountants said: ‘The Chancellor mentioned Entrepreneurs Relief (ER) being enhanced  but also that ER will not be available on the disposal of a business and its goodwill to a company to which the seller is related, a transaction that happens frequently. The Chancellor announced other new tax avoidance measures and again the devil will be in the detail.’

However, the lack of tax reliefs for business disappointed some commentators. Richard Rose, tax partner at BDO, said: ‘Notably absent from this Autumn Statement was the continued lack of support for the mid-market. Business rate changes and R&D for SME and larger businesses will no doubt have a positive impact, but what of the UK’s mid-sized businesses that are too large to benefit from small business policies and too small to take advantage of measures aimed at multinationals.’

However, the government has confirmed that it will allow gains that are eligible for Entrepreneurs’ Relief (ER) and deferred into investment under the Enterprise Investment Scheme (EIS) or Social Investment Tax Relief (SITR) to benefit from ER when the gain is realised.

It will also increase the annual investment limit for Social Investment Tax Relief (SITR) to £5m per annum, up to a total of £15m per organisation, from April 2015 and will consult on a new relief for indirect investment in social enterprises.

The current situation where companies can claim dual relief through different government departments, for example for generation of renewable energy, will be removed. In future, all companies substantially benefiting from other government support for the generation of renewable energy will not be able to use tax-advantaged venture capital schemes, with the exception of community energy generation.

The system will also be modernised so that companies will be able to apply online using the HMRC’s new digital service from 2016.

The TIIN for Capital Gains Tax‐ Restricting Entrepreneurs’ Relief (ER): restricting unfair tax advantages on incorporation is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382400/TIIN_1025_cgt_entrepreneurs_relief.pdf