Commentary

C3.1302C Business asset disposal relief for partners and sole traders—eligibility

Capital gains tax
Capital gains tax | Commentary

C3.1302C Business asset disposal relief for partners and sole traders—eligibility

Capital gains tax | Commentary

Business asset disposal relief for partners and sole traders

C3.1302C Business asset disposal relief for partners and sole traders—eligibility

One of the three circumstances in which there can be a disposal of business assets for business asset disposal relief (which was previously known as entrepreneurs' relief prior to April 2020) purposes is a disposal of the whole or part of a business by a sole trader or partner, and this will be a material disposal that qualifies for the relief if the business is owned by the individual throughout the period of two years ending with the date of the disposal (one year broadly for disposals before 6 April 2019, see 'Material disposal of business assets' in C3.1301).

A sole trader who takes on a partner or partners and therefore disposes of (or of interests in) assets used in his business on entering the partnership is treated as disposing of a part of the business1.

A disposal by an individual of the whole or part of his interest in the assets of a partnership is also treated as a disposal by him of the whole or part of the business carried on by the partnership2. Each individual who is a partner in a business at any time is treated as owning the business carried on by the partnership at that time3. The general effect of these provisions is that an individual's transactions in connection with becoming or being a member of a partnership can qualify for business asset disposal relief as

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