Commentary

C3.1301 Business asset disposal relief―basic rules

Capital gains tax
Capital gains tax | Commentary

C3.1301 Business asset disposal relief―basic rules

Capital gains tax | Commentary

C3.1301 Business asset disposal relief―basic rules

Business asset disposal relief , which was previously known as entrepreneurs' relief before the tax year 2020/21, is a capital gains tax relief on qualifying business disposals by, typically, small and medium-sized business owners, be they shareholders in their personal company, sole traders, partners, or trustees of a settlement with a qualifying beneficiary1. Disposal for these purposes is any kind of disposal that gives rise to a capital gain2, so includes, for example, sales, gifts, transfers at undervalue, capital sums derived from assets (see C1.319), and capital distributions (see D6.207)3 (such as those made in respect of shares disposed of as a result of the winding up of a company4, though see 'Business asset disposal relief on distributions in a winding-up' in C3.1302A regarding the targeted anti-avoidance rule (TAAR) dealing with such distributions).

Lifetime limit and tax rate

Where relief applies the disposal is charged to capital gains tax at a rate of 10%, subject to a lifetime limit on gains in respect of which the relief can be given. The lifetime limit has risen since the relief was first introduced on 6 April 2008 as follows5:

Date of disposalLifetime limit
Disposals on or after 6 April 2008 but before 6 April 2010£1m
Disposals on or after 6 April 2010 but before 23 June 2010£2m
Disposals on or after 23 June 2010 but before 6 April 2011£5m
Disposals on or after 6 April 2011 but before 11 March

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial