Changes to Capital Gains Tax and Entrepreneurs’ Relief


There has been an 8% reduction in the rates of Capital Gains Tax (to 20% for higher rate payers and 10% for basic rate payers), but not on sales of residential property or carried interest.

The Budget corrected some anomalies in recent changes to entrepreneurs’ relief. These could improve the position for taxpayers who have incorporated their businesses since 3 December 2014 or have sold assets connected to a business disposed of to a family member since 18 March 2015. The adjustments only apply in certain circumstances, so it is worth revisiting relevant transactions to check whether the tax position has changed. Other changes apply for sales of companies holding shares in joint venture companies or corporate partners with shares in trading companies, meaning more investments could qualify as trading companies.

Finally, in certain circumstances, external investors in unlisted trading companies of which they are not directors or employees may be eligible for a 10% rate of Capital Gains Tax when they sell their shares. As with entrepreneurs’ relief, there will be a lifetime cap of £10 million on eligible gains.      

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