THIS week’s budget has spelt good news for companies in Portsmouth, as the Chancellor raised the level of Entrepreneur Relief from £5m to £10m.
It means that if a business is worth £10m or less, the owner would only have to pay 10 per cent tax on any money he got from it if it was sold.
And Mike Dyer, director of Verisona solicitors based at 1000 Lakeside in Northarbour, says it was a ‘clever move’ which will encourage business growth.
Under the previous Government, companies were only given relief of the 10 per cent tax rate on their business value up to £1m.
After that they faced paying 18 per cent and then 28 per cent tax.
Shortly after the coalition Government came to power last year, Chancellor George Osborne raised the threshold to £5m.
Now he has doubled that to £10m.
For any value over £10m, the business owner will still have to pay the 28 per cent tax rate to the Government.
The aim is to make it more affordable for owners to sell their companies on.
Mr Dyer said: ‘Some business owners may have got fed up with the economy and wanted to sell up, but couldn’t afford to pay the tax bill.
‘If they do sell, they’ll be selling to companies who want to grow the business, who have identified that they can grow, and who will want to grow them in order to make their money back.
‘What the Government has done is really very clever, because this will all come about through private finance, not Government money, apart from the Government receiving less money from tax.’