Commentary

C3.1305 Business asset disposal relief—associated disposal

Capital gains tax
Capital gains tax | Commentary

C3.1305 Business asset disposal relief—associated disposal

Capital gains tax | Commentary

Business asset disposal relief—other disposals

C3.1305 Business asset disposal relief—associated disposal

As outlined in C3.1301 business asset disposal relief (previously known as entrepreneurs' relief before April 2020) applies to an associated disposal — ie where an individual owns an asset personally and it is used for the trade of a partnership of which he is a member, or for his personal company, and the disposal is associated with another disposal to which business asset disposal relief applies (a relevant material disposal). It is not necessary for a gain to arise on the relevant material disposal or, if there is a gain, for a claim to business asset disposal relief to be made in respect of it1. It should be noted that the relief is not available to trustees and does not extend to disposals associated with a material disposal by a sole trader. The rules for associated disposals were amended for disposals on or after 18 March 2015 to ensure the relief is only available where the individual claiming the relief is permanently reducing his participation in the business by a meaningful amount.

Rules applying to associated disposals on or after 18 March 2015

There is a disposal associated with a relevant material disposal if condition A1, A1A, A2 or A3 is met, and conditions B, C and D are met2.

Condition A1

Condition A1 is that the individual (P) makes a material disposal of business assets (see 'Material disposal of business assets' in C3.1301) consisting of at least a 5% interest

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