Difference between trading and investment business for Entrepreneurs' relief

HMRC state  CG64080 that the straightforward letting of property is not a trade, though certain lettings are not necessarily regarded as indicating a non-trading activity (see C3.1302).

HMRC's internal guidance requires that, where a claim to entrepreneurs' relief is made and—

·         (a) the income arising from a business carried on by an individual or partnership has been assessed as trading income, and

·         (b) either before or after the cessation of the business or the disposal of the whole or part of the business the HMRC officer discovers that, despite the income being assessed as trading income, the business is not that of a trade or of furnished holiday lettings,

the case should be submitted to Capital Gains Technical Group  CG63965

The terms “business” and “trade” have distinct meanings in the context of the Taxes Acts and denote different kinds of economic activities. Whereas the legislation enacting the relief described in this Division contains the above definition of “business”, rollover relief as described in Division C3.4 applies where a “business”, rather than a “trade”, is transferred as a going concern and does not contain a definition of “business” (see C3.402 for a discussion of the relevant principles and case law).