Changes To Entrepreneurs Relief Likely To Impact Veterinary Practice Sales
With a new government in Westminster, veterinary practice owners considering a sale of their practice are urged to act now to avoid being hit by potential changes to Entrepreneurs’ Relief in the next Annual Budget.
Entrepreneurs’ Relief (ER) is a very valuable tax relief, applicable to business owners, which restricts the capital gains tax payable on a sale of their business, in most cases to 10%. In recent years, previous Chancellors of the Exchequer have mooted changes to ER, but it was Philip Hammond in 2018, who last tightened the rules. The cost to the exchequer is around £2bn per year and it is expected that the government will explore changes to ER in the next budget. The new government is likely to make unpopular decisions in the first part of their five-year term. Entrepreneurs’ Relief is a very generous tax relief which benefits only those who have held businesses for two years or more and it could be argued that ER does not benefit wider society. The Conservative Party manifesto outlined that they would ‘review and reform’ ER but it does not state when or how they will go about it.
Keith Chandler, M&A Director for IVC Evidensia in the UK, said,
“Practice valuations have been at an all-time high and whilst we have seen prices decline a little across the board for practice purchases, it would seem likely that 2020 may be the last chance for practice owners considering an exit to benefit from both a high sale price, and a reduced level of tax paid through Entrepreneurs’ Relief.
He went on to say,
“We purchased over 70 practices in 2019 and we continue to acquire great veterinary clinics of all shapes and sizes, across the UK, offering veterinary practice owners a secure future for their practice, their clients and most importantly, their employees.”
Further information below:
Philip Hammond tightens the rules around Entrepreneurs’ Relief: https://www.ft.com/content/a8ac64aa-dba3-11e8-9f04-38d397e6661c
Sajid Javid sets March 11 date for Budget to ‘level up’ UK regions https://www.ft.com/content/27daa4ee-3099-11ea-a329-0bcf87a328f2
Tax update: Could this be the end for Entrepreneurs’ Relief? https://www.hazlewoods.co.uk/news/tax-update-could-this-be-the-end-for-entrepreneurs-relief
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