Capital gains – entrepreneurs’ relief

Graham Chase, Tax Partner, CMS

The lifetime limit of £1 million is to be increased to £2 million for disposals on or after 6 April 2010, a doubling of the benefit of the 10% rate. The usual date for the time of disposal is the date of an unconditional contract or if the contract is conditional when the condition is satisfied. 

Gains realised pre-6 April above the £1 million limit will not benefit, but nor will such gains restrict the availability of relief on gains from 6 April when the new cumulative limit of £2 million applies.

All other rules remain the same.

4 thoughts on “Capital gains – entrepreneurs’ relief”

  1. Not quite same subject – but close.

    The changes to the EBT and “payments to employees via trusts” etc is said to be applicable from April 2011.

    Is HMG really allowing what they say are tax avoidance schemes a year to rip out as much as possible?

  2. It is not clear from what they have announced. They simply say the EBT anti-avoidance legislation “will take effect from 6 April 2011” but it may conceivably apply to arrangements already in place at that time, or possibly even have retrospective effect.

    Leaving aside the possibility that the legislation may have retrospective effect, it does seem strange that they are waiting until 2011. However, HMRC may be unsure as to how best to attack these structures which obviously can be very complicated in nature. HMRC will want to be sure that they do not leave any loopholes in the changes they make.

    1. Thanks for the reply.

      I suspect that HMRC indeed don’t know how to attack the EBT structures given their variety and that they need time to consider. In the meantime spreading uncertainty and confusion is as good a delaying and off putting tactic as they can find.

      Very unsatisfactory that our tax system is not clear and perhaps deliberately so?

      1. To be fair to HMRC there are some genuine difficulties as to where to draw dividing lines; for example, between income and capital receipts, or between a temporary deferral where a benefit in kind charge may be appropriate and a permanent deferral where it would not.

        But as you say, some uncertainty in the system might be deliberate.

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