Monday 27 January 2020 3:56 pm

Entrepreneur tax relief to be scaled back in Budget

The government will reportedly scale back a tax break for entrepreneurs amid concerns it is overly generous to the wealthy. 

A senior cabinet minister told The Financial Times that the Chancellor Sajid Javid is drawing up plans to curb the tax break.

The Conservatives’ general election manifesto outlined plans to review and reform the relief. 

Earlier this month Boris Johnson indicated to a group of female entrepreneurs in his Uxbridge constituency that the government would go ahead with the plans. 

He told them: “I have to tell you the Treasury is fulminating against it because there are some people who are staggeringly rich who are using that relief to make themselves even more staggeringly rich.” 

The tax break was introduced in 2008 by the Chancellor Alistair Darling. There had been fears that changes to capital gains tax would harm small business owners.

The relief allows entrepreneurs to pay a lower rate of 10 per cent of capital gains tax instead of the usual 20 per cent. 

Last year the former head of HMRC called on the government to scrap the tax. Sir Edward Troup said break provided “no incentive for real entrepreneurship”. 

Additionally The Institute for Fiscal Studies said that the relief does little to change “the amount of income [businesses] create” and it can “limit the government’s ability to raise revenue”. 

Miles Dean, head of international tax at Andersen Tax UK, said: “It beggars belief that just as the UK is going it alone and leaving the EU, the newly elected Tory majority government proposes to… curb a tax relief that inspires many entrepreneurs to cut loose and take risks”. 

He added: “Politicians need to consider in detail what this actually means commercially and what it will do for an economy that relies very heavily on entrepreneurs.” 

The Treasury declined to comment.