Business Asset Disposal Relief can reduce Capital Gains Tax on qualifying business disposals. It is available to individuals and, in some circumstances, trustees; it is not a relief for a limited company’s own gains.
The name does not mean every asset used in a business qualifies.
Establish what is being sold
A disposal may involve a whole business, a qualifying part of a business, a partnership interest or shares in a qualifying company. Selling an isolated asset while the business continues may have a different outcome.
For shares, the company, the shareholder’s interest and their role in the business all need consideration. Shares acquired through a qualifying employee option scheme can have different conditions.
Check the history
Ownership and qualifying activity must meet the required conditions over the relevant period. A disposal after a business has ceased also has timing requirements.
Associated disposals of personally owned assets used in a business need separate assessment. Charging rent can affect the relief available.
The relief is subject to a lifetime limit. Previous claims therefore matter as well as the gain on the proposed sale.
Use the current conditions
See the GOV.UK eligibility and rate guidance. Do not rely on an old rate or assume that a property-letting activity qualifies as a trade.
Review eligibility before agreeing the transaction. We will need the ownership history, your role, details of the business and any earlier relief claims.