The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Business asset disposal relief (BADR), which was previously known as entrepreneurs’ relief, is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 10%. For disposals made on or after 11 March 2020, the relief is available on up to £1m of capital gains for each individual over their lifetime; prior to 11 March 2020, the lifetime limit was £10m. This reduction in the lifetime limit was in FA 2020 and is detailed further below.
Relief is available on gains arising to sole traders, partners, shareholders and trusts; it is not available for companies. The relief also applies to gifts and non-arm’s-length sales.
This guidance note sets out the main qualifying conditions for BADR, how the relief is calculated and claimed, and details on associated disposals.
HMRC guidance is set out at CG63950P and the relevant legislation can be found in TCGA 1992, ss 169H–169SH.
BADR applies to qualifying business disposals which fall into three main categories:
material disposal of business assets ― this is the main type of disposal which will attract BADR. It applies to individuals who trade through a company, as a sole trader or in a partnership. Relief will be available if part or the whole of the business is sold and the relief is modified when the business has ceased trading
disposal of trust business assets where business assets are held by the trustees of a settlement. More details can be found in the Business asset disposal relief (entrepreneurs’ relief) ― trusts guidance note, or
associated disposals which relate to disposals of assets used in the trade but owned personally. BADR will apply if the asset is disposed of as part of the individual disposing of their interest in the business
TCGA 1992, s 169H(2)
Whilst the three types of qualifying disposal for BADR all refer to disposals of business
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
The supply of fuel and power is treated as a supply of goods for VAT purposes. Supplies are fuel and power are normally liable to VAT at the standard rate. However, providing certain conditions are satisfied, it is possible for suppliers to charge the reduced rate of VAT on certain supplies of fuel
Why capital losses are importantCapital losses are usually set against the capital gains that arise in the same year as the loss, reducing the total taxable gains for that year. Losses not used in this fashion are normally carried forward to be set against the next available gains.However, in
IntroductionConsortium relief enables losses of a consortium company to be transferred to consortium members in proportion to the consortium member’s interest in the consortium company, and vice versa. Consortium relief is a flexible relief which is available in several different scenarios which are
Class 2 and Class 4 national insurance contributions (NIC) are paid by self-employed individuals and partners in a partnership on their profits arising within the UK. This guidance note considers Class 4 contributions. For Class 2 contributions, see the Class 2 national insurance contributions