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Why did the government axe entrepreneurs’ relief in relation to incorporation?
KEY POINTS
- TCGA 1992 new s 169LA discounts goodwill as a relevant business asset on transfers between related parties.
- HMRC said the rules had previously given rise to an unintended tax benefit.
- Other tax reliefs may be useful on incorporation.
- The cost of entrepreneurs’ relief since its introduction.
With Advent barely under way on 3 December 2014 the autumn statement proved it was not to be the season of goodwill towards all men at least for tax planning purposes with incorporations.
Before that date individuals and partnerships incorporating a trade could be seeking two welcome tax effects. The first was to pay 10% tax on the goodwill which they sold to a company. The purchase price became a debt owed by the company allowing a tax-free drawing as it made...
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