In a ministerial statement made on 24 January 2008, the Chancellor, Alistair Darling, announced the introduction of a new relief for entrepreneurs from 6 April 2008.

The new relief will apply for disposals or part disposals of:

1. A trading business that an individual runs either alone or in partnership.

2. Shares in a trading company by officers and employees that hold at least 5% of the shares in the company and are able to exercise at least 5% of the voting rights in the company.

For qualifying gains of up to £1 million, the tax rate will be 10% with the balance taxed at the new flat rate of capital gains tax of 18%. The new relief will be a lifetime relief available on multiple occasions on a cumulative basis. The government will keep the limit under review.

The Chancellor indicated that the new relief would cost the Exchequer £200 million.

The Chancellor also indicated that current reliefs, such as EIS and VCT reliefs, and the annual capital gains tax exemption will remain available.

Draft legislation dealing with the implementation of the capital gains tax reforms, including the new entrepreneurial relief, is expected to be published by HMRC today.

This article was originally published by PLC 25/01/08 and is reproduced with the permission of Practical Law Company Ltd. www.practicallaw.com