ENTREPRENEURS were among the biggest winners from the Budget, with a raft of measures aimed at encouraging people to invest in their own businesses.
The changes, most of which will come into play on 6 April, will include:
•A hike in the lifetime limit for entrepreneurs from £5m to £10m.
•Relaxation of the Enterprise Investment Scheme (EIS) rules, making it easier to take advantage of capital gains tax (CGT) and income tax relief.
•An easing of the conditions necessary to benefit from Venture Capital Trusts (VCT).
Osborne announced the lifetime limit for entrepreneur’s relief will double to £10m, greatly increasing the benefits for anyone disposing of shares in their own company.
It allows business owners to pay just 10 per cent capital gains tax, instead of the higher threshold of 28 per cent, up to a lifetime limit of £10m, after which they will revert to the higher threshold.
To qualify you need to own at least five per cent of the company and have worked there for at least a year.
The Treasury estimates the move will cost around £310m over the course of the parliament.
The limit was set at £1m just two years ago, rising to £2m in April 2010 and £5m in June 2010.
Entrepreneurs will also benefit from a £500 increase in the annual exemption from CGT to £10,600.
The Treasury announced the maximum investment to qualify under the EIS will double to £1m and tax relief on both EIS and VCT initiatives will increase from 20 per cent to 30 per cent. The maximum investment in a single company has also risen from £2m to £10m.
The size of companies that qualify under both schemes will rise from 50 employees or less to 250 or less, with the gross assets allowed more than doubling from £7m to £15m.
Osborne also pledged to consult on ways to make EIS rules simpler by removing more restrictions on which types of investors can apply and which shares qualify.
Changes to EIS and VCT rules are designed to make it easier and more lucrative to invest in small businesses.