Conservatives and Labour target Capital Gains Tax and Entrepreneur’s Relief
By now most people are aware that there is a general election on Thursday 12th December and whilst an election brings with it a time of political uncertainty, it also brings with it times of uncertainty for tax payers – and this time around, particularly for entrepreneurs.
As part of their manifestos, both the Conservatives and Labour have targeted, amongst other taxes, Capital Gains Tax and in particular a helpful relief called ‘Entrepreneur’s Relief’.
Entrepreneur’s Relief operates to reduce the rate of Capital Gains Tax charged on disposals of certain qualifying business assets. The relief is available to individuals, the trustees of some trusts and, if the disposal took place whilst the deceased was alive, to personal representatives. Provided the relevant conditions are satisfied, the rate of tax charged is reduced to 10% on any gain arising. However, as with all reliefs, there are conditions that need to be satisfied and restrictions on those who can claim.
As part of their manifestos, Labour have said that they will abolish Entrepreneur’s Relief; whilst the Conservative manifesto claims that the party will “review and reform” the relief. Whilst it is not clear how either party intends to follow through with their promise (or indeed any effects elsewhere), what is clear is that Entrepreneur’s Relief is in the spotlight meaning now is the time for those who may be able to claim the relief (particularly owner managed businesses and individual) to have a review to see if there is any action they could take to safeguard what is available now.
But it is not only Entrepreneur’s Relief that is under the spotlight. Both Labour and the Conservatives have between them in one way or another focused on Income Tax, Capital Gains Tax, the Residence Nil Rate Band, second homes, SDLT and non-residents purchasing residential property. Whether the promises made will come to fruition (and if so, how) is anyone’s guess, but one thing is clear; taxes that affect a large part of the population in one way or another are under the spotlight and whilst nobody can second guess what is around the corner, we can work with what we know now.