Capital gains tax – entrepreneurs’ relief for trustees Part 1

The entrepreneurs’ relief provisions were inserted into this year’s Finance Bill at a very late stage, in response to political pressure. Not surprisingly, the Parliamentary debate concentrated on attacking and defending political positions rather than a detailed examination of the small print. This was particularly unfortunate as the Chancellor chose to base the new relief on the complex, and in places incomprehensible, retirement relief which baffled and frustrated practitioners and their clients prior to the introduction of tapering relief in 1998. Entrepreneurs’ relief is not, however, the same as retirement relief. In one respect it is less generous, as the relief does no more than reduce the tax rate from 18% to 10%, while retirement relief could exempt gains from tax altogether. In other respects it is more generous. An asset may qualify for relief after only one year’s ownership (while for retirement relief up to 10 years’ ownership might be required), and the entrepreneurs’ relief may apply the 10% tax rate on up to £1m of gains.