The Chancellor, Rishi Sunak, announced in his Budget speech that he will overhaul Entrepreneurs’ Relief. Entrepreneurs’ Relief is designed to encourage people to start their own business by granting them a reduced rate of 10% Capital Gains Tax.
The Chancellor said this is currently an unfair tax system which only incentivises 1 in 10 entrepreneurs, with 3/4 of the tax-saving going to only 5,000 individual taxpayers.
Rishi Sunak said the system, which costs the taxpayer £2bn per year, was expensive and ineffective. He wants to encourage more risk taking and is therefore not abolishing the tax break entirely. However, the lifetime allowance on claims from the relief will be reduced by 90% going down from £10m to £1m — a move the Chancellor said would save £6bn per year.
Find out more about the Chancellors Budget announcement here.