Business Asset Disposal Relief

Business Asset Disposal Relief, previously known as Entrepreneurs' Relief, is a UK tax benefit that provides a reduced Capital Gains tax rate for individuals disposing of certain business assets. The purpose of this relief is to encourage entrepreneurship and business growth by offering tax incentives to business owners who sell or dispose of their businesses or business assets.

Key points about Business Asset Disposal Relief:

• Reduced Capital Gains tax: With Business Asset Disposal Relief, qualifying individuals can benefit from a reduced rate of Capital Gains tax of 14% and then 18% from 6 April 2026 when they sell or dispose of eligible business assets.
• Eligible Business Assets: The relief applies to the disposal of qualifying business assets, which can include shares in a company (subject to meeting certain conditions), assets used in a business, or the whole business itself.
• Qualification Criteria: To be eligible for the relief, certain conditions must be met, such as owning the asset for a specified period (normally 2 years) and being involved in the business in certain capacities (e.g. as a sole trader, partner, employee, or officer of a company).
• Lifetime Allowance: Every individual has a lifetime allowance, currently £1 million, for the gains that can benefit from this relief. Subject to further tax planning, gains above this limit would be subject to the standard Capital Gains tax rates.

The above is a just a summary of some of the key Business Asset Disposal Relief criteria. Please contact us for detailed advice specific to your circumstances.