IFS calls for Entrepreneurs' Relief to be scrapped

23 Oct 2019

The Institute for Fiscal Studies (IFS) has called for Entrepreneurs' Relief (ER) to be scrapped.

In a new report, the IFS stated that owner-managers 'respond to changes in income taxes by adjusting how and when they take money out of their company', not by changing the amount of income they create or how much investment they make.

According to the IFS, lower rates of tax on business income produce 'large benefits that disproportionately accrue to the rich'.

The business group also suggested that ER costs the government £2.4 billion per year relative to taxing gains at the full capital gains tax (CGT) rate.

Commenting on the matter, Phil Hall, Head of Public Affairs and Public Policy at the Association of Accounting Technicians, said that ER is 'extremely expensive, misguided and ultimately ineffective'. He continued: 'If the government is serious about wanting to encourage entrepreneurialism, committing this £3 billion of relief to help small British businesses to grow and prosper would be a far better investment for UK plc than encouraging business owners to sell up.'

The report can be read in full here.

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Higgisons was formed by John Higgison in Oxford Street in 1965 and was originally part of the Accountancy Tuition Centre until James McHale became managing partner and the firm moved to its City Road premises in 1982.

We like to become involved at the planning stage of the formation of a business venture to ensure that it is structured as flexibly and efficiently as possible so that it can cope with changes in legislation or personal circumstances.

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