Practice guide: How to optimise entrepreneurs' relief

It has been three years since entrepreneurs’ relief was introduced as a concession following the uproar over the abolition of business asset taper relief. Entrepreneurs’ relief has been amended three times since then – most significantly on 22 June 2010 when the lifetime limit was increased to £5 million and the method of calculation changed to a separate 10% tax rate. However the lifetime limit has now been further increased (again) to £10 million for disposals on or after 6 April 2011.

 

We can also expect further changes – although probably not before April 2012 – following the final report by the Office of Tax Simplification (OTS). While the report calls for certain simplifications to the relief it stresses both the importance of the relief as an incentive to entrepreneurs and its wide relevance as even in...