Condies reminds SMEs of changes to Capital Gains Tax and Entrepreneurs’ Relief as introduced in the Finance Bill 2016
Capital Gains Tax (CGT) rates for 2016/17 have been reduced from 18% to 10% for basic rate taxpayers, while for higher rate taxpayers the rate on gains over the unused part of their basic rate tax band will be charged at 20% (previously 28%).
A number of changes relating to entrepreneurs’ relief are also set to be introduced, including:
Associated disposals – relief will be due (subject to conditions) on privately-held assets when the accompanying disposal of business assets is to a family member
Disposals of goodwill – relief will be due (subject to conditions) when a business is transferred to a company controlled by five or fewer people or directors
Extension to long-term external investors – this applies the 10% CGT rate to growing gains on ordinary shares inan unlisted trading company.
Announcing the changes in his Budget 2016 speech, chancellor George Osborne said: “We’re putting rocket boosters on the backs of enterprise and productive investment.”