In May we reported concerns that changes to the rules on Entrepreneurs’ Relief would lead to retrospective taxation. The Government now appears to have taken note of these concerns and amended the Finance Bill 2016 to remove the possibility of retrospective taxation – at least in some circumstances.
Entrepreneurs’ Relief was introduced by the Treasury as an incentive to entrepreneurship and business growth. Capital Gains Tax arising from eligible sales is applied at 10 per cent rather than the full rate of Capital Gains Tax.
There had been concern that some people who had lawfully claimed the 10 per cent rate under the associated disposals rules may have found in retrospect that they did not qualify and would have to make up the difference to the then 18 or 28 per cent rates of Capital Gains Tax.
The amendment to the Finance Bill 2016 will mean that the new rules will only apply to the associated disposals of assets acquired since 13 June 2016, thereby preventing any retrospective liabilities from arising.
