What is Entrepreneurs’ Relief?
Entrepreneurs’ Relief aims to reduce the amount of Capital Gains Tax on a disposal of qualifying business assets on or after 6th April 2008. This is provided that you have met the qualifying conditions throughout a one year qualifying period either up to the date of disposal or the date the businesses ceased trading.
The qualifying conditions for each individual are subject to a lifetime limit, they are as follows,
– For disposals on or after 6th April 2008 – 5th April 2010 = £1 million.
– For disposals on or after 6th April 2010 – 22nd June 2010 = 2 million.
– For disposals on or after 23rd June 2010 – 5th April 2011 = £5 million.
– For disposals on or after 6th April 2011 = £10 million.
Entrepreneurs’ Relief is available to individuals and some trustees of settlements. It is not however available to companies or personal representatives of deceased persons or in relation to a trust where the entire trust is a discretionary settlement.
What Can Relief be Claimed On?
Relief can be claimed on a disposal of assets which fall under the following categories,
– Assets used in the business comprised in a disposal of the whole or part of your business. Qualifying business assets in this category include goodwill and business premises, not included are shares, securities and any other assets held as investments.
– Assets that were used in your business or a partnership of which you were a member, providing they were disposed of within the period of three years after the business ceased trading. This category again excludes shares, securities and any other assets held as investments.
– One or more assets consisting of shares in or securities of your personal company. These shares however must be disposed of either while the company is a trading company, or where you hold shares in a holding company of a group, the group of companies is a trading group, or within three years from the date the company ceased trading or being a member of a trading group.
– Assets owned by you personally but used in a business carried on by either a partnership of which you are a member, or by your personal trading company. The disposal will only be able to qualify provided it is associated with a disposal of either your interest in the partnership, or of shares or securities in the company.