An overhaul of entrepreneurs’ relief is high on the agenda as the Chancellor sets out his first Budget next month, but reform rather than abolition is surely a more sensible approach, argues Chris Etherington, tax partner at RSM
A Chancellor under pressure following an announcement to scrap a 10% tax rate on the sale of business assets, howls of outrage from the CBI and calls from ministers and business owners to reverse the decision. A lack of any substantial research or consultation on the issue, followed by an embarrassing reversal. Sound familiar?
This is not crystal-ball gazing but rather how entrepreneurs’ relief came into existence as then Labour Chancellor Alistair Darling responded to criticism of abolishing taper relief.
For many, rumours of the forthcoming demise of entrepreneurs’ relief is reminiscent of Groundhog Day.
The more notable flaws of entrepreneurs’ relief include its cost, failure to encourage individuals to start businesses and tendency to benefit those who are retiring rather than those seeking to reinvest.
