Could the Government end the 10% tax rate that is payable under the entrepreneurs relief scheme?

At the moment, if you earn £1 million in income, then you will pay income tax at the rate of 45%.  If you sell your buy to let portfolio and make a profit of £1 million, then you will pay capital gains tax at 28%.  But if you sell your business for £1 million, then you will pay tax at just 10%.  The Entrepreneurs’ Relief Scheme was introduced in April 2008 and since then it has saved people who sell their businesses £22 billion in tax.  This is a huge amount of money and there is a real risk that the scheme will not last much longer.

Jeremy Corbyn would no doubt end this tax break instantly if he got into power.  Tax breaks for multi-millionaires is certainly not Labour Party policy.  The Liberal Democrats feel the same way.  But even an incoming Conservative Government might think that it would be a good thing to get rid of a tax relief that in 2017-2018 cost the government £2.7 billion in lost revenue.  If we crash out of Europe with no deal, they might need this money badly for other things.  In addition, they might feel that scrapping a tax relief for wealthy business owners might get them some positive headlines in the tabloid press!

So, if you are thinking of selling a business, you would do well to do so now before the share of the proceeds that you have to give the government doubles.

If you would like an up to date valuation for your letting business, phone me, Adam Walker, on +44 (0) 845 226 9053 or email us at adam@adamjwalker.co.uk.