Commentary

C3.1303B Business asset disposal relief—favourable business structures

Capital gains tax
Capital gains tax | Commentary

C3.1303B Business asset disposal relief—favourable business structures

Capital gains tax | Commentary

Business asset disposal relief—business structure considerations

C3.1303B Business asset disposal relief—favourable business structures

One of the issues to consider with business asset disposal relief, which was known as entrepreneurs' relief before April 2020, is the best business structure for owner-managed businesses. Whilst planning opportunities are not the focus of this publication, it is useful to consider some of the relevant points.

Business asset disposal relief is in some ways more favourable to shareholders in limited companies and partners in partnerships than to sole traders. This is because sole traders will have to dispose of the whole or part of a business (see C3.1302C) to qualify for relief, and they do not qualify for relief on associated disposals at all (see C3.1305). Consideration therefore needs to be given to any assets held outside the business. In addition, there are no spouse or civil partner provisions in business asset disposal relief and this could cause problems where assets are held jointly by a husband and wife or civil partners, but only used in a sole trade.

However, the requirement that shareholders must

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