UK Budget 2020 – capital gains tax entrepreneurs’ relief lifetime limit

Mar 16, 2020


Entrepreneurs’ relief (“ER”) was first introduced in April 2008 after the abolition of taper relief and provides a 10 per cent rate of capital gains on qualifying business disposals. In recent years, the relief has been tweaked and its conditions amended. Most recently, Budget 2018 extended the ownership period of qualifying ER assets from one year to two years.

In the Budget, the Chancellor had two options on the table. To either further curtail the relief or abolish it altogether. The Chancellor chose to curtail announcing that from 11 March 2020, the lifetime limit on gains eligible for the relief is reduced from £10 million to £1 million.

The Chancellor also included several anti-forestalling clauses in the draft legislation which are designed to prevent taxpayers locking in access to the previous £10 million lifetime limit for contracts entered pre-11 March 2020 but not yet completed. A specific anti-avoidance rule has also been introduced for certain share for share exchanges which occurred after 6 April 2019 but before 11 March 2020. More detail on this is available in the relevant policy paper.