A TAX loophole for entrepreneurs has been slashed by Chancellor Rishi Sunak in today’s budget.
The “UK’s worst tax break” has been cut from £10million down to just £1million and all the savings will be sent straight back to small businesses in other pledges.
Read the latest Budget updates from our live blog here
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Mr Sunak delivered what has been called a “manifesto budget” and cut the tax relief which has been “ineffective” and “unfair”.
He said: “Entrepreneur’s relief is expensive… ineffective – with less than 1 in 10 claimants saying the relief has been an incentive to set up a business
“And unfair – with nearly three quarters of the cost going to just 5,000 individuals.
He added: “Just because it is called Entrepreneurs’ Relief doesn’t mean that it’s entrepreneurs who mainly benefit.”
Entrepreneurs relief allows company founders selling their business to pay capital gains tax at a rate of 10 per cent, instead of the 20 per cent rate that usually applies, to gains of up to £1million – down from £10 million.
It will impact 10,000 people who own a corner shop, garage or small construction firm when they sell-up for their retirement.
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But Mr Sunak pledged that any losses to businesses would be balanced out by a string of different measures to help shop owners.
He said it would save £6billion over the next five years.
He told the House of Commons: “80% of small business owners are unaffected by today’s changes… and I’m giving most of that money straight back to business through three additional measures.”
Those include pumping up Research and Development Expenditure, Structures and Buildings allowance and cutting taxes on employment.
What’s been revealed in today’s Budget?
- Fuel duty to be frozen for 10th year in a row
- 2nd booze duty freeze in 20 years
- £5billion of help for flood-ravaged communities
- Millions more to get sick pay in case they need to self-isolate
- National Insurance thresholds raised for employers – and a tax cut for Brits confirmed
- Tampon tax ditched
- More measure to tackle crime and make community sentences longer
- Tax breaks for firms which hire armed forces veterans
- War on potholes with £2.5billion to fill them
- New laws to guarantee access to cash machines
- Parents of sick premature babies to get £160 a week extra help
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