Is Boris about to push entrepreneurs under the bus?

Entrepreneurs’ Relief could be scrapped in the Budget on 11 March, leaving business owners without a valuable tax break when they come to sell their ventures, according to an article in The Times.

Prime Minister Boris Johnson has said the Treasury wants to remove the relief as it cost £2.4bn in 2018 in lost tax.

The Conservative Party manifesto at the recent general election said Entrepreneurs’ Relief (ER) would be reviewed and reformed.

ER is a valuable relief for business owners that allows them to reduce their capital gains tax (CGT) liability when they come to dispose of their enterprise. It has been subject to a number of restrictions over the years.

The relief, which was introduced in 2008, reduces the CGT rate to 10 per cent rate on the first £10m of gains on the sale of qualifying assets, compared with the normal rate of 20 per cent.

Scrapping the relief would be a controversial move by the Chancellor as many business owners see it as a valuable incentive to grow their venture, particularly when linked in with Enterprise Management Incentive (EMI) shares which automatically qualify for ER. EMI is used by many start up businesses as a way to recruit the right people.

The Federation of Small Businesses told The Times that many business owners view their access to the relief as their pension.

It is not clear whether ER would be replaced by something else, such as a version of Retirement Relief that was a predecessor to ER.

Alternatively, some form of relief could be kept for workers with share options to still incentivise innovative entrepreneurship.

Tax Partner, Paul Morris, has previously considered what business owners could do to protect their CGT positions should ER be further restricted.