The radical shift in the capital gains tax landscape on 23 June 2010, which increased the headline CGT rate to 28%, has far-reaching effects for owner managers contemplating a future sale of their company. Entrepreneurs’ relief (ER) was also considerably enhanced, enabling sellers to obtain a 10% CGT rate on their first £5m of eligible gains. This means that ER is now capable of producing tax savings of up to £900,000 (ie £5m x 18%, which is 28% main CGT rate less 10% ER CGT rate). Against the current backdrop of our penal tax rates, the low 10% ER rate now becomes a very valuable tax break.

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