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Markel Tax

21 Jan 2020

Entrepreneurs’ relief under threat!

Entrepreneurs’ relief (‘ER’) is an extremely valuable relief to business owners on any form of capital realisation, be it on sale, winding up of a company or shareholder restructuring and exits. Clients will expect the relief to be available on such disposals, reducing the tax from 20% to 10% on gains up to £10m. If advisers get it wrong, then the increase in tax is 100% and no one wants an unhappy client!

The relief has been under the spotlight for some time and, while calls for it to be abolished were not acted upon, changes have been made to existing complex qualifying conditions on the grounds that only those who hold a real economic stake in the business are eligible for the relief. The extension of the qualifying period to 24 months and changes to the personal company tests may particularly have an impact on many business owners. The perception, however, is that the relief is not being used in the way it was intended and the appetite for further reform of the relief or its abolishment has gathered momentum.

In their manifesto, the Conservatives have pledged to review and reform ER and it is fully expected that these changes will be made in the March 2020 budget. It is therefore crucial that action is taken now to review clients’ entitlement to the relief, especially for those holding shares in trading companies where recent changes may already adversely affect them.

The team at Markel Tax have put together a small webinar presentation covering the changes and what advisers should be considering now when discussing this issue with clients. It is clear that any exit plans should be top of the agenda to make sure that steps are taken where possible to preserve this valuable relief. The link to the webinar is shown below, please feel free to watch and contact us if you have any questions.

We can offer assistance in the form of ER reviews of businesses, including a review of shares in companies to confirm ER entitlement. We would gather the facts and provide a written opinion on the entitlement assuming a sale took place today.  The initial review will be carried out at a heavily discounted rate, with fees ranging from £950 to £1,500 plus VAT depending on the complexity involved. We would also be happy to provide advice on improving the ER position for those who do not qualify as part of a wider review based on agreed fixed fees.
Next article in series

10 Jan 2020

‘Smooth’ move by Government on implementation of upcoming IR35 changes