Last March, one of the headline-grabbing measures announced in what will be the only Budget speech of 2020 surrounded what we knew as entrepreneurs’ relief.
The relief was designed to be an incentive for entrepreneurs to start a new business by reducing the amount of capital gains tax payable when the time came to dispose of (or sell) certain business assets, where conditions are met.
But in reality, the Government clocked onto the fact that less than one in ten entrepreneurs admitted this carrot was tasty enough to entice them to start a new business.
It was an expensive relief, too, costing the taxpayer around £2 billion a year and benefitting a select few. The Government claimed three quarters of that went to just 5,000 businesses.
To add further fuel to the flames, the Institute for Fiscal Studies had criticised entrepreneurs’ relief while the Resolution Foundation called it “the UK’s worst tax break”.
Armed with those damning statistics and opinions, Chancellor Rishi Sunak tinkered with the existing relief and gave it the new name of business asset disposal relief.
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