Entrepreneur's relief changes afoot?

[jcv]

I see in the papers that a thinktank has floated the idea of scrapping entrepreneur's relief, labelling it "the worst tax break in the UK". This has got me thinking, if in the worst case scenario, ER did get the bin in the upcoming Autumn budget when could any changes take effect? Immediately or at the start of the next tax year?

I'm due to close my ltd company with an MVL in the next couple of weeks and take advantage of ER. Am worried that if the MVL process drags on then I could lose the ER concession. I heard you can apply to HMRC directly to take advantage of ER but would imagine that that's only post-MVL.

[northernladuk]

Just for clarity, articles on the above statement are here.

https://www.theguardian.com/politics...thinktank-says

https://www.granitemorgansmith.co.uk...reneurs-relief

Bearing in mind all they are doing at this point is urging the government to do it. That doesn't necessarily mean it's even going to happen and I shouldn't think it will happen as quickly as you say.

I would also have thought it would anyone starting the process after the agreed date. It does say on the gov page..
https://www.gov.uk/entrepreneurs-relief/how-to-claim

Deadline

Tax year when you sold or closed your business
Deadline to claim Entrepreneurs’ Relief

2018 to 2019 - 31 January 2021
2017 to 2018 - 31 January 2020
2016 to 2017 - 31 January 2019

Once you've applied and moved forward I would be very surprised if they change their decision.

[northernladuk]

Chris Maslin runs MVLOnline and is our resident MVL expert and I'm sure this is already on his radar. Might be worth dropping him a line if you aren't already using them.

[Maslins]

Chris Maslin runs MVLOnline and is our resident MVL expert and I'm sure this is already on his radar. Might be worth dropping him a line if you aren't already using them.

Well, thanks...yeah I heard the same snippets as a load of you will have seen. I don't get any inside info.

I tend to ignore all the pre Budget speculation. It happens every year, and whilst half of it may be enacted, half won't. Even the items that are, we'd need to wait for the fine detail to establish things like what you're asking...ie exactly when it might kick in for.

Not worth wasting too much time/brainpower on speculation IMHO, leave that to bored journalists.

[jcv]

Ah that's a good point re the deadline on gov.uk. Thanks for raising that. It would seem strange if they changed the goalposts on their own deadline for the 2018/19 tax year. I am aware stranger things have happened though!

I will certainly be using MVL online, I spoke with them last week.

Thanks guys, much appreciated.

[TheCyclingProgrammer]

Bear in mind that even without entrepreneurs relief, if you have significant retained profit an MVL and capital treatment is still likely to be much more tax efficient than paying income tax on a large dividend as you'll still only be paying 20% on the lot (less your CGT allowance).

[jamesbrown]

I'm sure they'll scale it back and reform it at some point. The lifetime limit of 10m is quite generous.

Personally, I doubt they'll scrap it any time soon. The Tories are running a minority administration and many of their backbenchers are going to leery about scrapping something called "entrepreneurs' relief", especially with Brexit coming and the Chancellor being pretty unpopular among backbenchers already. In the Autumn Budget, contractors are more likely to be impacted by changes to IR35 in the private sector and by a reduction in the annual pension allowance IMHO. Both of those are politically palatable. Pure speculation of course...