Entrepreneur's relief under threat

Business concerned over plans to scrap entrepreneurs’ reliefChancellor Rishi Sunak’s plan to scrap entrepreneurs’ relief in the Budget has been criticised by businesses, with it suggested that removing the £3bn of tax breaks could harm start-ups. Mike Cherry, chairman of the Federation of Small Businesses, said cutting the incentive would see the majority of firms who benefit losing around £15,000 each year. He said: “Scrapping entrepreneurs’ relief would make a mockery of the idea that it’s ever sensible to build up a business rather than invest in property, land or secure a gold-plated pension.” Mr Cherry added: “Everyday entrepreneurs throughout the country who are about to retire will be left permanently poorer by this change.” Adam Marshall, director general of the British Chambers of Commerce, said abolishing the relief – which lets entrepreneurs sell parts of their business and pay a 10% tax on any profits instead of the normal 20% levy - would be a “negative signal to businesspeople who take risks and invest upfront to grow a business over time.” He added: “It’s one thing to make the relief more targeted, but quite another to scrap it altogether.” The FT says the issue was raised in WhatsApp groups involving Conservative MPs, with one asking: “If we aren’t backing entrepreneurs, then who are we for?” Matt Kilcoyne, of the Adam Smith Institute think-tank, comments: “The entrepreneurs' relief is a policy that is based on good, solid Conservative values, so it seems strange for Rishi Sunak to put a tax on ambition.”