Chancellor Philip Hammond has decided not to scrap entrepreneurs relief, but has made conditions for qualifying stricter.
To ensure it is going to genuine entrepreneurs, the government will extend the minimum qualifying period from 12 months to two years.
However, Hammond said he wanted the UK to be a leading global player in global technology, so would not scrap the relief entirely.
Hammond says: “Encouraging entrepreneur members must be at the heart of our dynamic economy, so I will retain entrepreneurs relief.”
Helm Godfrey chairman Danby Bloch last month called for the industry to fight for the relief.
He says: “So, the expected tightening has happened. From 6 April 2019, you will need to have owned an asset for at least two years to qualify. But there’s an immediate restriction from today.
“Shareholders have to be entitled to at least 5 per cent of the net profits and distributable profits and net assets of a company to be able to claim a relief as well as five per cent of the ordinary share capital. This counters some tax “planning”.
The Budget today also confirmed that a new tax would be levied on digital platforms like Facebook and Amazon – a “UK digital services tax” on sales in the UK to make sure they “pay their fair share towards support of public services”.
Hammond maintained this was not a general online sales tax, but a “narrowly targeted tax on the UK-generated revenues of specific digital platform business models… targeted to tech giants, rather than small UK startups.”