CGT entrepreneurs’ relief

News: May 2011

CGT entrepreneurs’ relief

This is available for qualifying business disposals and gets ever more attractive. The relief is in the form of a reduction in the CGT rate to 10% on the first £10 million of gains in certain circumstances (£5 million if the disposal was between 23 June 2010 and 5 April 2011; £2 million if the disposal was between 6 April 2010 and 22 June 2010, and £1 million if the disposal was before 6 April 2010). It is therefore now worth a maximum of a staggering £1,800,000 (£10 million taxed at 10% rather than 28%) per individual, so clearly any methods of making sure you qualify for the relief have to be carefully considered.

We will be pleased to offer advice on this increasingly valuable relief by reference to your specific circumstances, as it can apply not just on a business sale but also with care on the sale of an asset used in the business (such as the property from which the business is run).

There are new techniques available to maximise entrepreneurs’ relief in the event of a business sale where there is an “earn out” element offered by the new owners, so that with care the complete package is subject to tax at only 10%.