Budget 2011 – Entrepreneurs’ Relief
In a surprise move, the Chancellor announced that the lifetime limit on entrepreneurs’ relief is to be increased from £5million to £10million. The change will be effective from 6 April 2011.
The lifetime limit applies to individuals as well as trustees of settlements. The amount of an individual’s gains that can qualify for entrepreneurs’ relief is subject to a lifetime limit. The limit applies to all qualifying gains, whatever the year in which they arose. Any such gains in excess of the limit are subject to the main rates of capital gains tax. Qualifying gains are subject to capital gains tax at 10%.
Where individuals or trustees make qualifying gains above the prevailing limit before 6 April 2011, no additional relief will be allowed for the excess. But if they make further qualifying gains on or after 6 April 2011 they will be able to claim relief on up to a further £5 million of those additional gains (or up to £8 million or £9 million where the earlier £2 million or £1 million limit applied), giving relief on accumulated qualifying gains up to the new limit of £10 million.