UK – lifetime limit on entrepreneurs’ relief reduced from £10 to £1M

Rishi SunakIn the UK Budget delivered today (March 11) Rishi Sunak, the Chancellor of the Exchequer, reduced the lifetime limit on entrepreneurs’ relief to £1 million.

Entrepreneurs’ Relief provides for a lower rate of Capital Gains Tax (10%) to be paid in the UK when disposing of all or part of a business where certain criteria are met. Until today it was subject to a lifetime limit of £10 million of qualifying gains. This measure reduces the lifetime limit to £1 million for Entrepreneurs’ Relief qualifying disposals made on or after today.

It means from today individuals who dispose of all or part of their business; individuals who dispose of shares in their personal company; and trustees who dispose of business assets will now pay 10 per cent Capital Gains Tax on the first £1 million of qualifying gains and 20% thereafter. Previously they paid 10 per cent Capital Gains Tax on the first £10 million of qualifying gains; and then 20%.

Here is what Sunak said of Entrepreneurs’ Relief in today’s budget speech.

Expensive – at a cost of over £2bn a year.

Ineffective – with less than 1 in 10 claimants saying the relief has been an incentive to set up a business.

And unfair – with nearly three quarters of the cost going to just 5,000 individuals.

Just because it is called Entrepreneurs’ Relief doesn’t mean that it’s entrepreneurs who mainly benefit.

For all these reasons, I have heard representations that I should completely abolish it.

The Institute for Fiscal Studies have criticised it.

The Resolution Foundation called it “the UK’s worst tax break”.

I’m sympathetic to that argument.

But at the same time, we shouldn’t discourage those genuine entrepreneurs who do rely on the relief.

We need more risk-taking and creativity in this country, not less.

So I have decided not to fully abolish Entrepreneurs’ Relief today.

Instead, I will do what the Federation of Small Businesses called “a sensible reform” and reduce the lifetime limit from £10m to £1m.

80% of small business owners are unaffected by today’s changes.

Those reforms save £6bn over the next five years – and I’m giving most of that money straight back to business through three additional measures.

The Research and Development Expenditure credit will be increased from 12 to 13% – a tax cut worth £2,400 on a typical R&D claim.

The Structures and Buildings Allowance will be increased from 2 to 3%, giving an extra £100,000 of relief if you’re investing in a building worth £10m.

And, to cut taxes on employment, I will deliver our promise to increase the Employment Allowance by a third to £4,000.

That’s a tax cut this April for nearly half a million small businesses.

UK

Policy Paper

The Capital Gains Tax Entrepreneurs’ Relief policy paper published today by Her Majesty’s Government is published here

Previous articles Fusion DigiNet articles about Capital Gains Tax and Entrepreneurs’ Relief

Daily Mail owner considering options for its Euromoney stake

Euromoney plcDaily Mail and General Trust plc (DMGT), commenting on recent media speculation, has announced that it is considering strategic options for its stake in Euromoney Institutional Investor Plc.

Euromoney is an international business-to-business information company focusing on the global financial community. Holding around 49% of the shares, DMGT is Euromoney’s largest shareholder.

DMGT said it has not received any proposal nor is it in discussions with any party to acquire its holding in Euromoney.

UK, London

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JPIMedia acquires Johnston Press Group businesses

Johnston PressJPIMedia, a newly-formed company owned by bondholders of Johnston Press, has acquired the group after the publisher put itself into administration. Johnston Press, which owns papers including the i, The Scotsman and The Yorkshire Post, had been looking to refinance £220m of debt due to be repaid in June next year.

As part of the transaction, the bondholders have agreed to reduce the level of senior secured debt by £135m (more than 60%), from £220m to £85m, with extended debt maturity to December 2023. Additionally, the bondholders have provided £35m of additional funding for the business.

David King, the former Chief Executive Officer of the Group, becomes Chief Executive of JPIMedia. He said, “The sale of the business to JPIMedia is an important one for the Johnston Press businesses as it ensures that operations can continue as normal, with employees’ rights maintained, suppliers paid, and newspapers printed. We will focus on ensuring the group’s titles continue to publish the high-quality journalism we are known for and which has never been more important. I look forward to working with JPIMedia to assess and implement the opportunities available to us in the future, underpinned by a stronger balance sheet.”

UK, Edinburgh

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UK Government tightens entrepreneurs relief rules

Philip Hammond

The Rt Hon Philip Hammond

UK Chancellor Philip Hammond today delivered his Autumn 2018 Budget.

A change to the minimum period qualifying rule for capital gains tax via entrepreneurs relief will effect the tax paid by some business owners on selling their businesses. Entrepreneurs’ relief reduces the amount of Capital Gains Tax paid on disposals of businesses, or shares in a personal company, by offering a reduced 10% tax rate on up to £10m worth of lifetime gains.

The Chancellor announced that from 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months. The extension of the qualifying period is designed to dis-incentivise shareholders from making a quick sale. There had been calls from both sides of the house to scrap the relief.

Read the Policy Paper for the 2018 Budget here. The details of the change to entrepreneurs relief are given in section 4.7 Enterprise Tax.

UK

 

Salesforce founder Marc Benioff to acquire Time Magazine for $190M

Time MagazineBillionaire and co-founder of Salesforce.com, Marc Benioff – along with his wife, Lynne Benioff – are to buy Time Magazine for an estimated $190 million in cash, just eight months after it was sold to Meredith Corporation. The deal could close within one month, but it must first get regulatory approval.

The Benioffs, who are purchasing the magazine personally in a the deal unrelated to Salesforce, will not be involved in the day-to-day operations or journalistic decisions, which will continue to be led by TIME’s current executive leadership team.

Meredith completed its purchase of Time at the end of January 2018. Soon after its completion, Meredith said it was selling Time’s news and sports brands to focus on other brands that served its core target audience: American women.

Benioff recently tweeted, “The power of Time has always been in its unique storytelling of the people & issues that affect us all & connect us all. A treasure trove of our history & culture. We have deep respect for their organization & honored to be stewards of this iconic brand”.

Time Editor-in-Chief Edward Felsenthal said, “On behalf of the entire TIME team, we are very excited to begin this next chapter in our history. We can’t imagine better stewards for TIME than Marc and Lynne Benioff.”

USA, New York, NY & Des Moines, Iowa

 

Blackstone completes acquisition of PSAV

BlackstonePrivate equity and real estate funds managed by Blackstone have completed the acquisition of event experiences company PSAV. As part of the completed transaction, affiliates of Goldman Sachs will be reinvesting alongside Blackstone in the transaction to continue to participate in the ongoing growth of PSAV. The terms of the transaction were not disclosed.

PSAV is a global leader in event experiences, providing creative, production, advanced technology and staging services to help meeting planners deliver more dynamic and impactful experiences at their meetings, trade shows and special events. The team consists of more than 9,000 professionals across 1,500 on-site venue locations and 49 branch offices within the United States, Canada, Mexico, Europe, the Caribbean, and the Middle East. It was recently named to the Forbes 2018 America’s Best Employer list.

PSAV delivers on its purpose of connecting and inspiring people by creating impactful event experiences. Through its deep expertise in creative, production, advanced technology and staging services, PSAV is an invaluable partner to meeting and event planners. It is the trusted provider of choice at leading venues across the globe.

In June, the companies announced a definitive agreement for Blackstone to acquire PSAV from affiliates of Goldman Sachs and Olympus Partners.

USA, New York, NY & Schiller Park, IL

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CRU Group acquires Steel Market Update

CRU GroupCRU Group, the metals, mining and fertilizer consultancy, has acquired the US-based Steel Market Update conference, training and newsletter business. The terms of the transaction were not disclosed.

Founded in 2008, Steel Market Update provides and analyses real-time pricing, market trends, and relevant information related to the North American flat rolled steel market through its newsletter, website and events.

Robert Perlman, Chairman of CRU, said, “We are delighted to be joining forces with John and his team. Our businesses have a shared commitment to independent and insightful coverage of the steel market. CRU’s global position will be greatly strengthened by SMU’s coverage of North America. The SMU brand will go from strength to strength under the CRU umbrella.”

UK, London & USA, Hobe Sound, FL

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