First there was retirement relief, then there was business asset taper relief, and now there is entrepreneurs' relief. No doubt the next government will try something else! The latest relief has been introduced following the uproar from small business owners who felt that the proposed 18% CGT was an unfair tax levied when they sold their businesses to fund their retirement.
The new relief, available from April 6 2008 will be available in respect of gains made on the disposal of all or part of a business or on disposals of business assets.
The first £1 million of gains that qualify for relief will be charged to capital gains tax at an effective rate of 10 per cent. The £1 million is a cumulative lifetime relief and as such can be used on a single transaction or on a series of transactions. Gains in excess of £1 million will be charged at the normal 18 per cent rate. Of course, this is not so great for entrepreneurs who will buy and sell businesses through out their lifetime. So perhaps entrepreneurs' relief is a bit of a misnomer.
As such, the new relief is a kind of resurrection of the old retirement relief, which was phased out between 1998 and 2003. The new rules, to be enacted on April 6, are simpler. There is no minimum age limit for entrepreneurs' relief (under retirement relief you generally had to be 50 plus to get relief). And in general, entrepreneurs' relief will be available where the relevant conditions are met for a period of one year, instead of the retirement relief qualifying period of up to ten years.
There will be no minimum age limit for the relief. In general the new relief will be available where the relevant conditions are met for a period of one year.
Where a business simply stops trading, rather than is sold, relief will be available on gains on assets formerly used in the business and disposed of within three years of the cessation of the business.
The rules are quite complex and in order to qualify for the relief there a number of conditions that need to be met. We do take a closer look at the draft legislation in our subscribers section of the report. If you are not already a subscriber then please join us and subscribe.
It should be noted that the final legislation has not been seen so there may be some small amendments. We will take a look at the legislation and if there are any relevant changes we will post them here on this blog.
Utilities Company providing two primary services; utility and telegraph pole replacement and installation. Along with an overhead and underground cabling division.
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Established for over 20 years, this successful family run business operates in the Insulated Glass Units sector (IGUs).
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