Business asset disposal relief: better known as “ENTREPRENEUR’S RELIEF”
Entrepreneur’s Relief, (ER), reduces the amount of Capital Gains Tax (CGT) on a disposal of “qualifying business assets” and is typically most relevant when business owners are selling up.
The idea behind ER was to reward entrepreneur for their risk-taking. And whilst the relief seems straightforward, as usual, the devil Is in the detail. But if you get it right, then, according to current legislation, you will only pay CGT at 10% on gains, up to the lifetime limit.
Whilst trying to provide a simple explanation, we know we’ve already strayed into technical jargon; and that’s without even getting into the legislation.
Fortunately, our qualified tax expert will be at hand to guide you.
What we can do?
A key part of getting it right is understanding you and your business. And then plan!
How much is it?
Our fees may be for tax planning and/or making the claim itself; once we have a feel for your affairs, we would be able to provide an estimate.
What do you mean by a “qualifying business assets”? Well, if you are selling shares in a company, it must be a trading company to qualify: not, for example, an investment company.
What do you mean by “lifetime limit”? Claims will be limited to the first £1 million of lifetime gains. So if you have already claimed ER on gains of £1 million or more, you will no longer qualify for the relief on future disposals.
What conditions will I have to satisfy to be eligible? For a qualifying period of two years leading up to the date of disposal, you’ll need to be sole-trader, or a director/employee of the company; you’ll need to have owned more than5% of the share capital.
Will my spouse share the relief? That depends….
- The relief may halve your rate of tax
- Plan carefully so you don’t fall foul of the do’s and don’ts
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