Business owners to lose £15,000 each should Government scrap Entrepreneurs’ Relief, says FSB

The Federation of Small Businesses (FSB) has called on the Government to reconsider plans to “scrap” Entrepreneurs’ Relief – arguing it would “destroy retirement” for business owners.
The warning comes in response to reports that the Government may discontinue the benefit, which enables business owners to dispose of a business tax-efficiently.
Under the scheme, business owners who have owned a share in a company for at least two years can sell their stake at a reduced rate of tax (10 per cent) on all gains on qualifying assets.
According to the Government, the scheme in its current state allows “the rich to get richer”, while offering very little to genuine small business owners.
However, the FSB argues that disposing of the relief would “make a mockery” of the idea that it is sensible to build up a business rather than invest in property or land or “secure a gold-plated pension”.
“Everyday entrepreneurs throughout the country who are about to retire will be left permanently poorer by this change,” said FSB chairman Mike Cherry.
The latest statistics suggest that only around 10 per cent of individuals who claim Entrepreneurs’ Relief are selling businesses worth more than £1 million.
Around 38,000 small business owners who include the disposal of their business in their retirement plan, however, would lose an average of £15,000 each as a result of the change.
The FSB is instead calling on the Government to consider reform, rather than scrap the relief, as was outlined in the Conservative Party general election manifesto.
“Sensible reform would involve refocusing entrepreneurs’ relief so that it only applies to the first £1 million of business sales. Doing so would protect the vast majority of those who benefit from this incentive each year,” suggested Mr Cherry.
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