Entrepreneurs’ relief is a capital gains tax (CGT) relief available to taxpayers who make a qualifying business disposal by selling or giving away their businesses after 6 April 2008. TCGA 1992, s 169H(1)

This document discusses the conditions for relief, meaning of material disposals of business assets, and definition of a trading company. It also covers the meaning of associated disposals and restrictions and lifetime limit for relief.

Entrepreneurs' relief is a key relief in many business scenarios. To read about it in context of some common types of transactions, see the following guidance notes:

  • Rollover reliefs
  • Tax implications of share sale
  • Tax implications of trade and asset sale
  • Share for share exchanges
  • Loan notes and Qualifying Corporate Bonds (QCBs) and non-QCBs
  • Tax treatment of earn-outs and deferred consideration
  • Enterprise investment scheme re-investment relief
  • Informal winding up
In most instances, entrepreneurs' relief will be available to:
  • sole traders and partners selling / gifting the whole or part of their businesses (furnished holi-day lettings are also included)
  • company directors and employees holding at least 5% of the ordinary shares and voting rights in a 'qualifying company' who sell / gift all or part of their shareholding

Up to 23 June 2010, the relief worked by reducing qualifying gains by 4/9ths. The remaining 5/9ths of the gain was then charged at 18% giving an effective rate of 10%. Qualifying gains arising from 23 June 2010 are taxed at a flat rate of 10%. The need to reduce the gain by 4/9ths is removed. TCGA 1992, s 169N

Access this article and thousands of others like it free for 7 days
with a trial of TolleyGuidance.

ACCESS THE FULL ARTICLE

Already a subscriber? Login

Request a Free Trial to TolleyGuidance to gain access to the full article

Access this article and thousands of others like it free for 7 days. Written exclusively by tax professionals for tax professionals, TolleyGuidance combines tax technical commentary with practical guidance to support you day-to-day.

* denotes a required field