Chancellor has rare opportunity to deliver tax cuts and make simplifications
Comments provides by Menzies Partner Richard Godmon
With the focus on austerity continuing, concerns are growing that the Chancellor could remove some tax breaks intended to incentivise entrepreneurial investment. This could have disastrous consequences for the UK economy.
Since its introduction in April 2016, Investor’s Relief has been welcomed as a tax break for individuals wishing to invest in a trading company without necessarily being a direct employee or a named director. As the tax relief requires individuals to hold shares for a minimum period of three years, no one has yet benefited from the tax break, which will allow them to pay tax on eligible gains from share disposals at the discounted rate of 10%.
When the former Chancellor first introduced this tax break in April 2016, it was intended to incentivise an important group of investors, who wouldn’t normally qualify for Entrepreneurs’ Relief because they aren’t remunerated by the business they are investing in.
While it is too early to say how many individuals are expecting to benefit from the tax break, it is likely to be at least as many as currently claim Entrepreneurs’ Relief, and possibly more.
Tax reliefs in this area have begun to attract more attention from the Treasury however, as they are costing more than expected. A report published by the National Audit Office in 2013 revealed that the cost of Entrepreneurs’ Relief was £2.9 billion in 2013/14, three times more than originally expected. Part of the increase was probably due to the fact that the annual threshold for Entrepreneur’s Relief claims has risen from £1 million to £10 million, but the NAO also wondered whether there was undetected avoidance.
Based on these figures, it would not be unreasonable to assume that Investor’s Relief, which has a similar threshold for claims, could cost the Chancellor a similar figure when it kicks in from April 2019 onwards.
Autumn Budget 2017: Business Sector Wish Lists
Here follows a summary of the headline wish lists for the Chancellor’s 2017 Autumn Budget from each of Menzies’ business sector teams.
Business Services sector
Hospitality & leisure sector
Property and Construction Sector
Retail & wholesale sector
Transport & logistics sector
For more information about Menzies LLP or to talk to us about the impact of the Autumn Budget 2017 and implications on your business and personal finances, contact your Menzies Relationship Partner directly or complete our online contact form.