Practical considerations for business owners | Corporate law

Things that need to be considered resulting from the reduction to Entrepreneurs’ Relief…

After much anticipation the new chancellor, Rishi Sunak, announced in his budget that entrepreneurs’ relief will not be abolished. Instead, the lifetime limit has been reduced from £10 million to £1 million. But, what are the practical legal considerations for business owners?

In brief, the rules allow business owners of two years or over to pay less capital gains tax when they sell by way of a reduction of 10% from 20%. Business owners who are able to benefit from the full £1 million would still have a potential tax saving of £100,000. However, it is important for them to be aware that if a business owner has already sold shares prior to the budget of £1 million they are likely to have exhausted their lifetime limit.

We will also see professionals advising their business owner clients to seek to extract as much value as possible from their business by way of tax planning, this will particularly apply to family-owned businesses.

The biggest beneficiaries of the change are, of course, small business owners. Indeed, the raison d’etre of entrepreneurs’ relief is indeed that very purpose – to benefit entrepreneurial risk-takers running businesses on a smaller budget than most other businesses. As corporate legal advisors, many of our SME clients see the money that they receive upon selling their businesses as a form of pension that they would not ordinarily have received had they followed a more conventional career path.

For further information please contact Philip Chapman, Corporate Director on 0121 227 3879 or

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