Chancellor George Osborne’s announced that the CGT tax rate would rise from 18% to 28% from midnight last night, and that Entrepreneurs’ Relief will increase from £2m to £5m. 

“This is a big boost for anybody looking to sell their business,” John Bissell (pictured left), senior partner at business sales consultancy LBA told Recruiter.

“By increasing the entrepreneur’s relief from £2m to £5m the vast majority (95%) of people selling their recruitment businesses will only pay 10%. I anticipate a rash of people putting their businesses on the market.”

Colin Mackintosh, tax partner at PwC, told Recruiter: “I think the way Osborne has approached capital gains tax is positive. He’s discussed it widely and the advice he got was that any higher than 28% would actually lower the tax take. Capital gains tax is a voluntary tax, in that you only pay it when you sell something. If the level was at 50%, say, people wouldn’t bother to sell.” 

Tim Evans (pictured right), a director at Catalyst Corporate Finance, told Recruiter: “The budget is surprisingly attractive for entrepreneurs, which of course the recruitment sector is famous for producing.

“The ‘entrepreneurs relief’ rate of 10% on the first £2m of gains is to be extended to the first £5m, plus there are attractive National Insurance exemptions for new businesses outside London and the South-East. All this will sustain the volume of growth companies and start-ups in the recruitment sector.

“While the increase in CGT from 18% to 28% is a rise, it is still lower than many people feared it could be. And no doubt clever tax planning will be used by many entrepreneurs to find a way to lower their CGT rate further.”