Don’t overlook Entrepreneurs' Relief

Political posturing during 2010 has turned Entrepreneur’s Relief into an effective vehicle for reducing tax  liabilities of small and business owners, according to Grant Thornton’s Mike Warburton.

In a talk at the IRIS World 2010 event in London, Warburton described Entrepreneur’s Relief as a “sop” to mollify objections from the small business lobby about the withdrawal of business taper relief from April 2008.

The initial conditions for Entrepreneur’s Relief were that the taxpayer needed to own 5% of shares in a firm and there was a lifetime limit of £1m relief that could be claimed. In his March Budget, chancellor Alistair Darling increased the limit to £2m and the Conservatives bumped it up to £5m. “Because the Capital Gains Tax rate has gone up to 28%, the value of Entrepreneur’s Relief [10% rate] has shot up from £80,000 to £900,000, “ said Warburton. “The name of the game is to maximise this for clients.”

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