The abolition will see a tax cut of over £130 for each of Britain’s "3 million strong army of the self-employed".
Osborne also announced that the headline rate of Capital Gains Tax will be cut from 28% to 20% and CGT paid by basic rate taxpayers from 18% to 10%.
The government is also introducing a brand new 10% rate on long term external investment in unlisted companies, up to a separate maximum of £10 million of lifetime gains.
George Osborne said:
"Our Capital Gains Tax is now one of the highest in the developed world, when we want our taxes to be among the lowest.
"The rates will come into effect in three weeks’ time. The old rates will be kept in place for gains on residential property and carried interest."
Tina Riches, national tax partner at Smith & Williamson, commented:
"Not all investors or businesses count for the lower entrepreneurs’ relief rate, so the general reduction in CGT rates for higher rate taxpayers from 28% to 20% will encourage further investment in companies, helping to boost investment for those not eligible for entrepreneurs’ relief. Ultimately, this reflects the Chancellors leaning towards the enterprise economy, partly at the expense of owners of buy to lets and second homes.
"Basic rate taxpayers will also benefit where investment meets the Chancellor’s criteria, with a rate drop from 18% to 10%, providing help for those with large share portfolios who may be hit from April 2016 by the higher taxes on dividends. This is likely to mean taxpayers reconsidering their portfolios."
