The term Entrepreneurs’ relief (ER) has recently been changed to ‘Business Asset Disposal
Relief’.
What has changed?
Business Asset Disposal Relief – still known by many as Entrepreneurs’ relief (ER) – is an
HMRC-approved tax relief for company shareholders. Since the 2020 Budget, it has
undergone some changes, along with the new name.
Previously, business owners could claim up to £10m lifetime allowance on capital gains tax
(CGT) under the scheme. Entrepreneurs who were selling all or part of their business could
benefit from paying a discounted rate of 10% on CGT when selling qualifying assets. This
discounted rate of 10% compared with the 20% rate which would otherwise apply, is still the
case. However, the lifetime allowance of up to £10m has now been significantly reduced to
£1m.
What does this mean for you?
Despite the reduction in lifetime allowance, the relief can still be very attractive to SME
owners and shareholders. If you’re a business owner planning to sell up or wind up your
company, and you qualify, then this relief can still provide you with significant savings on
your tax bill.
If you’re selling all or part of your business, you will still only pay 10% on CGT on profits over
the lifetime of your business under the scheme. This is considerably less than the 18% for
basic rate income tax payers, or the 20% for higher rate payers.
For more information about whether you qualify for Business Asset Disposal Relief check
here. Your Accountant will also be able to help you.
Members’ Voluntary Liquidation (MVL)
If you are thinking about closing down your company using the Members’ Voluntary
Liquidation (MVL) process – we can help you.
We provide a low cost MVL service (from £995 +VAT +disbursements) and aim to distribute
100% of the company assets to the shareholders after 35 days from the date of liquidation.
Contact us on 0161 907 4044 or [email protected]
