Entrepreneurs’ relief applies to the sale of a qualifying business asset that was made on or after 6th April 2008. It is relevant if you sell a business or a business asset.
The relief is available as long as you have met the qualifying conditions throughout a one-year qualifying period, either up to the date of disposal or the date the business ceased in anticipation of the closure of the company. The relief is subject to a lifetime limit of £10,000,000 of qualifying capital gains for each individual (previously £5,000,000 up to 31st March 2011).
Entrepreneurs’ Relief is available to individuals and some trustees of settlements, but is not available to companies and personal representatives of deceased persons.
If you are entitled to Entrepreneurs’ Relief, the first £10,000,000 of qualifying gains will be charged at a rate of Capital Gains Tax (CGT) of 10% and any gains over and above this limit will be charged at the rate of 18% if you are a Basic Rate Tax payer or 28% if you are a Higher Rate Tax payer.
Claiming entrepreneurs' relief
To claim Entrepreneurs’ Relief you have to meet the relevant qualifying conditions throughout a period of one year prior to making the gain. You can claim relief, subject to the qualifying conditions set out below, on a disposal of the following assets:
- Assets used in the business comprised in a disposal of the whole or part of your business.
- Assets that were in use for your business and were disposed of within the period of three years after the time the business has ceased.
- Assets owned by you personally but used in a business carried on by your personal trading company.
Maximum entrepreneurs' relief
Entrepreneurs’ relief may be claimed on more than one qualifying disposal as long as the £10,000,000 limit of qualifying gains is not exceeded. Because you may be entitled to relief on more than one occasion, it is important that you keep a record of the gains against which you may have previously made a claim.
If your qualifying net gains exceed £10,000,000 no further relief is due and the excess over that amount is wholly chargeable at the appropriate CGT rate.
Husband, wife or civil partners
Husbands, wives and civil partners are treated separately for entrepreneurs’ relief. Each person is entitled to relief up to the maximum lifetime limit of £10,000,000 qualifying gains, provided the relevant conditions are satisfied.