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Entrepreneurs鈥� Relief was renamed in Finance Act 2020 with effect from 6 April 2020. The new name is generally used in this guidance but should be read as applying to times before that date.

TCGA92/S165A

Business Asset Disposal Relief is available in respect of material disposals of shares in or securities of a company (or interests in shares or securities) where:

• the company is the 鈥減ersonal company鈥� of the individual or, in the case of the disposal of trust business assets, of the qualifying beneficiary - see CG63985, and
• the individual or the qualifying beneficiary is an officer or employee of the company, or of a company within the same group - see CG64110, and
• the company is either a trading company or the holding company of a trading group. These terms have the same meaning as in TCGA92/S165A but you should note that from 18 March 2015 TCGA92/SCH7ZA modifies the meanings given in section 165A (TCGA92/S169SA) - see CG64060.

Company

鈥淐ompany鈥� is defined for CGT purposes in TCGA92/S288. It includes any 鈥渂ody corporate鈥� or 鈥渦nincorporated association鈥� but does not include a partnership or a limited liability partnership (LLP) which is carrying on a trade, profession or business with a view to profit, which is treated as a partnership for TCGA purposes.

Groups of Companies

For Business Asset Disposal Relief purposes TCGA92/S165A(14) defines a group of companies as consisting of a company which has one or more 51 per cent subsidiaries, together with those subsidiaries.

A 51 per cent subsidiary is defined in CTA10/S1154 - S1157. A company is a 51 per cent subsidiary if more than half its ordinary share capital is owned directly or indirectly by another company.

鈥淭rading company鈥� or 鈥淭rading group鈥�

TCGA92/S165A(3) defines a 鈥渢rading company鈥� as a company which carries on trading activities and does not carry on other activities to a substantial extent.

TCGA92/S165A(8) similarly defines 鈥渢rading group鈥� as a group of companies, one or more of which carries on trading activities, and whose members鈥� activities taken together do not include activities other than trading activities to a substantial extent.

FA2015 amended the definitions of trading company and trading group with effect from 18 March 2015, but the amendments were repealed by FA2016 and treated as never having had effect. FA2016 also introduced Schedule 7ZA (see TCGA92/S169SA) which applies from 18 March 2015, effectively replacing the FA2015 changes. TCGA92/S169S(4A) 鈥� introduced by FA2015 - will therefore only be relevant to claims made before FA2016 was enacted. Further guidance is available at CG64081.