Budget 2020: Reduction to Entrepreneurs’ Relief lifetime limit to £1m has been saved
Budget 2020: Reduction to Entrepreneurs’ Relief lifetime limit to £1m
11 March 2020
Patricia Mock, tax director at Deloitte, comments on Entrepreneurs’ Relief:
“After much speculation in the run up to the Budget, the Chancellor has announced that the Government intends to reduce the lifetime allowance for Entrepreneurs’ Relief (ER) from £10m per individual to £1m, with immediate effect, covering disposals from 11 March 2020 onwards. This will result in a reduction of the maximum relief available from £1m to £100,0000 for individuals who realise gains that qualify for ER.
“The limit was originally £1m when ER was introduced in 2008, then was increased to £10m in 2011 and it is unsurprising that the Chancellor is seeking to reduce the cost of this relief to the Exchequer, which was £2.3bn in 2017/18. The benefit of this relief was concentrated amongst those with gains of over £1m, with 5,000 people having gains of over £1m and so claiming £1.75bn of the £2.3bn cost of the relief. The reduction of the lifetime limit to £1m will restrict these large claims and focus the relief onto smaller gains, and provide over £6bn of savings over the next 5 years.”
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