The Chancellor Rishi Sunak has slashed the lifetime level of entrepreneurs’ relief but stopped short of getting rid of the widely-criticised tax break completely.
Effective immediately, the lifetime limit on the amount of the relief individuals can claim falls from £10m to £1m — a move the chancellor said will save £6bn over five years. The relief allows business owners of at least two years to pay capital gains tax (CGT) when they sell at a rate of 10 per cent rather than the normal 20 per cent.
The change in the life limit is expected to affect 9,000 people. The government said more than 80 per cent of those using the relief would be unaffected by the change and the decision was based on evidence that the high threshold had done little to incentivise entrepreneurial activity, with benefits accruing to a small number of rich taxpayers.