Budget 2020: Rishi Sunak 'to axe £3bn business tax break' in bid to boost North and Midlands
2 min read
Rishi Sunak will scrap a multi-billion-pound tax break for entrepreneurs at this month's Budget to boost infrastructure spending across the country, it has emerged.
The Sunday Times reports that the Chancellor will kill off entrepeneurs' relief, a waiver that currently costs the Treasury £2.7bn a year, when he unveils the set-piece tax-and-spend statement later this month.Entrepreneurs' relief was brought in by Gordon Brown in 2008 to encourage people to start a business.
It slashes capital gains tax from 20% to 10% on the first £10m of gains from starting a company.
But critics including former HMRC chief Edward Troup have called for an end to the break, with the ex-revenue head saying it offers "no incentive for real entrepreneurship" because it offers savings to people who have already made their money.
According to The Sunday Times, Mr Sunak will move to scrap the policy because he believes it mainly benefits wealthy businessmen in the south of England.
Instead, the paper reports that the retained revenue will be used to fund government pledges to hire more nurses and police officers as well as kick-start building projects in the North of England and the Midlands.
But the Chancellor, who took over following the dramatic resignation of Sajid Javid last month, could face a backlash from traditional Conservative supporters over the move.
A group of 150 business owners wrote to Mr Sunak on Friday urging him to retain the tax break.
Signatories included former trade minister Lord Jones and PhotoBox entrepreneur Graham Hobson.
"Other entrepreneurs have sold their business and are now currently considering whether to start a new business or not and the rate of tax is a very important factor," they said in a letter.
"We know of one who will start his next business in Singapore if entrepreneurs’ relief is not available to him."
The Sunday Times also reports that the Chancellor could overhaul air passenger duty and scrap tax relief on red diesel as part of a wider push on green taxes.
Mr Sunak will unveil his Budget on March 11.
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