Serving over 2 Million visitors each year

Search
Free Accounts Software for All Small Businesses
You can now download TAS Basics for FREE. It’s the complete working program and there’s no charge, no obligation and no time limit. Get it now!

What is entrepreneurs' relief?

print  e-mail 

Entrepreneurs' Relief is a Capital Gains Tax concession on qualifying business disposals, providing a 10% CGT rate on business sales - up to a maximum lifetime allowance of £2m.

A flat CGT rate of 18% applies in other cases, from 6th April 2008 (and a new 28% rate for higher rate taxpayers from 23rd June 2010).

The lifetime allowance doubled to £2m for qualifying assets as a result of changes made in the March 2010 Budget. This was further extended to £5m during the 'Emergency Budget", with effect from 23rd June 2010.

Following the abolition of the CGT Taper Relief scheme from 6th April 2008, the Government initially intended to enforce a new flat 18% rate on capital gains.

This 10% rate concession is a result of lobbying by business organisations who claimed that an 80% increase in CGT rate on business disposals was an anti-entrepreneurial measure.

There are a number of conditions which apply for business owners who wish to use Entrepreneurs' Relief. Here a some of the key conditions:

  • A business disposal can apply to the whole business, or merely a part of it.
  • Entrepreneurs' relief only applies to individual taxpayers.
  • The relief is not retrospective, and won't include past disposals.
  • Relief can apply to business shares, providing the claimant owns at least 5% of the company (and has voting rights), and is an officer or employee of the company.
Entrepreneurs relief can be claimed any number of times from 6th April 2008, up to the lifetime limit of £5 million. Capital gains tax of 18% (or 28% for higher rate taxpayers from 23rd June 2010) will apply on amounts greater than this limit.

You can read HMRC's FAQ's here and our overview of Entrepreneurs' Relief here.

Posted March 19, 2008

Latest articles in Business Tax
 
Annual Investment Allowance limit reduction from April 2012 - what should businesses do?
George Osborne's Emergency Budget gave notice that the Annual Investment Allowance (AIA) annual limit is to be significantly reduced from April 2012. What should businesses do to plan in advance? [August 12, 2010]
 
Accountant provides clarification on how dividends are taxed
A small business accountant provides some clarification on the amount of tax payable by shareholders when dividends are paid, particularly, by private companies. [July 14, 2010]
 
Tax strategies to consider in a high tax environment
The era of the Additional Rate Tax has begun. Partners and the self employed, in fact all non-PAYE earners, who clock up income over £150,000 during the 2010/11 fiscal year will be hoping that the new 50% rate will go away, but it won’t and it is no use burying our heads in the sand. [April 26, 2010]
 
Annual Investment Allowance - how does it work?
One of the few increases in tax allowances disclosed in the Budget last month was a doubling of the Annual Investment Allowance, from £50,000 to £100,000. So, how does the AID work in practice? [April 16, 2010]
 
Business rate changes from October 2010
One of the key announcements from Budget 2010 was in a 'freeze' in business rates for some small companies from October 2010 - so which businesses will benefit, and by how much? [March 26, 2010]
 
Tax tips for entrepreneurs to address before 6th April 2010
Business advisors at Deloitte are urging entrepreneurial businesses to make final reviews of their tax position to ensure their financial house is in order before the start of the next tax year. [March 22, 2010]
 
Declaring dividend payments before 50% tax rate start date
The approaching commencement of the 50% tax rate and the phased withdrawal of personal allowances for those with income between £100,000 and £112,950 are leading those affected to consider tax planning to find potential ways to reduce the increasing tax burden. [March 18, 2010]
 
How long should small businesses keep tax records for?
A new guide has been produced explaining which tax records small businesses (including the self employed and limited companies) should keep, and for how long. [February 25, 2010]
 
Tax relief and Christmas entertainment
We look at how staff parties are treated for tax purposes by HMRC, and what you should bear in mind when an employer provides an employee with seasonal gifts. [December 4, 2009]
 
Paying private bills through your company
You need to be aware of the tax consequences of paying for personal bills via your business - the rules differ depending on whether you are trading as a sole trader, or as a limited company. [November 16, 2009]
 
Guide to Business Rates
This simple guide will help you understand what business rates you might have to pay, how to challenge the rates set, and even if you can claim any relief. [October 29, 2009]
 
How to make the most out of trading loss relief
Under concessions offered in the Finance Bill 2009, trading losses for businesses can now be carried back up to a maximum of three years. How the rules work. [October 13, 2009]
 
Claiming travel expenses from home to work - the rules
Whether you are a limited company director, or a sole trader, this article looks out how expense claims for home to work travel are treated by HMRC. [October 9, 2009]
 
How to manage Corporation Tax during a recession
Here are some useful tips to help small businesses manage their corporation tax liabilities during the downturn. [September 18, 2009]
 
How to register your company for corporation tax
One of your first duties as a limited company director is to register your company to pay Corporation Tax. How the registration process works, including which forms you need to complete. [August 5, 2009]
 



Click Here





Our Partners
Key Services
Key Services
Useful Guides
Click Here

© Bytestart Limited 2005-2010 - All Rights Reserved | Terms of Use | Site List | Website Feeds | Rss Feed RSS Feed

Business Insurance, Business Bank Accounts, Public Liability Insurance, Professional Indemnity, Startups, Limited Company, Sole Trader