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Political change may be in the air, and entrepreneurs are nervous

In case anyone missed it, there will be a general election in or before May 2015, and the risk of political change has implications for many in the business world. It seems that entrepreneurs are some of those most nervous about the future.

Since being elected in 2011, the coalition government has increased the cap on Entrepreneurs Relief to the first £10m of their 'lifetime gains'. This change brought about a more favourable capital gains tax regime for private company sellers, as eligible shareholders pay just ten per cent CGT on these gains, compared to the prevailing rate of 28 per cent.

As the Labour Party steps up its pre-election rhetoric, it has indicated its intention to increase income tax for those earning over £150,000 from 45 to 50 per cent. This news did not go down well with the UK business community, many of whom see reduction or abolition of Entrepreneurs Relief as the next likely step.

Many business owners are now in a position to sell their business for the first time since the start of the financial crisis, on the back of increased business confidence in recent months. It may be that the new potential threat posed to Entrepreneurs Relief by a change in government is galvanising entrepreneurs into considering exiting their businesses before next year.

Labour have also received negative reviews from business professionals after the floating of the idea of a tax on business turnover, for purposes of fighting tax evasion by big companies. Conservative Chairman called the idea ‘economic vandalism’, and many have pointed out that the policy would hit businesses hard, whatever their size, but particularly those that operate to tight profit margins.

A properly planned sale takes approximately nine months from initiation to completion, so anyone wishing to sell before the first quarter of 2015 needs to get the ball rolling now. St Matthew can advise you on the best course of action for you and your business.


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