New Tax Relief for Small Business Owners

The Chancellor Alistair Darling has announced a new "entrepreneurs' relief" on capital gains tax for small business owners and investors.  The move cuts the capital gains tax rate from the planned 18% to 10% on lifetime gains of up to £1 million - but not everyone will benefit.  These changes may affect how you plan your business strategy and personal wealth plans and we would recommend you take advice before committing yourself to a particular course of action.

In October last year, the Chancellor gave second home owners cause for celebration when he announced plans to cut capital gains tax to a flat rate of 18%, down from 40%.  But at the same time he abolished taper relief, which can result in rates as low as 10% and indexation allowance - a real blow for business.

The new relief takes effect from 6 April 2008 and applies to cumulative gains made in connection with the disposal of trading business, including certain disposals of shares in trading companies.  The first £1 million of gains will be charged at 10%, with a rate of 18% applying to gains over £1 million.  The relief will not apply to those selling second homes and from 6 April, they will pay the flat rate of 18%.

Please contact Andrew Procter or Alistair Latham for advice on how to plan a tax-efficient future on 01482 324591.

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