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Entrepreneurs’ Relief

The Entrepreneurs’ Relief is a tax relief that you can claim if you’re selling shares in, or giving your business to someone. Since 6th April 2020, it was renamed the Business Asset Disposal Relief. Claiming the tax relief enables you to reduce the Capital Gains Tax (CGT) that you owe on your profits. 

You can pay CGT at a reduced rate of 10%, rather than up to 20%.

Am I eligible for the Business Asset Disposal Relief (Entrepreneurs’ Relief)?

  • If you’re a sole trader, a limited company director, or a shareholder owning at least 5% of the business, you can claim the relief
  • Yes, if you bought the shares through an EMI scheme after 5 April 2013
  • You must have owned the business or shares for at least two years before you sell
  • If your business is no longer trading, you can still qualify for the relief if you sell the shares within three years
  • If you’re a trustee selling assets held in the trust, you may qualify, but you should confirm whether you are eligible with HMRC

How can I claim the relief?

There are a few ways to claim the Business Asset Disposal Relief:

You can claim as many times as you want, up to a total of £1 million over your lifetime. If you sold up before 11th March 2020, you can claim up to £10 million over your lifetime.

When can I claim?

Take a look at the below table. These are the deadlines to be aware of when it comes to claiming Business Asset Disposal Relief:

Tax year ended Deadline
5th April (2020/21 tax year) 31st January 2023
5th April (2019/20 tax year) 31st January 2022
5th April (2018/19 tax year) 31st January 2021

 

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