Entrepreneurs’ Relief was widely expected to be abolished or curtailed in this year’s Budget given that the Conservative Party manifesto stated that it would “review and reform” the relief.
However, the 2020 budget has instead shrunk the relief back to its original £1m – the same as when it was introduced in 2008.
The reduction in relief takes place with immediate effect thus leaving no time for planning or adjusting. To add to this, there are two provisions to counter forestalling arrangements:
- the date of disposal will be deemed to be the date assets are transferred in cases where unconditional contracts have been exchanged before 11 March 2020 but not completed until after that date. In this case the £1m lifetime limit will take effect
- and, Entrepreneurs’ Relief will be calculated by reference to the new lifetime limit for share-for-share exchanges taking place in the 2019/20 tax year but before 11 March 2020.