Capital gains tax incentive may benefit but ‘disrupt’ professional services sector

The new capital gains tax incentive Chancellor John Healey unveiled in his Budget may benefit LLP firms in the professional services sector if they qualify, but it also risks disrupting partner dynamics within the firms. Healey announced the so-called ‘Founder’s Relief’ capital gains tax (CGT) incentive in his Budget speech on Wednesday in a bid to keep companies operating in the UK, which he said is a 10 per cent rate on lifetime gains of up to £10m “for the founders of our most successful firms”. It has not yet been confirmed which firms qualify for the incentive, which is due to be introduced next April after a consultation, but some experts have raised questions over whether LLPs, which many professional services firms are, may be included, and how this could impact them. The limited liability partnership (LLP) model came into force over 25 years ago and is used by many firms across the sector, including law firms, accountancy practices, and some doctors. In this structur