Business assets

A ‘business asset’ is:

·      whole or part of a sole trade / partnership business;

·      an asset used in a business at the time the business ceases to be carried on; or

·      shares or securities (loan stock etc) in a company.

TCGA 1992, s 169I(2)

If the individual is only selling part of his business, this must be a part that is capable of being carried on as a going concern; the disposal of a single asset or a group of assets which do not constitute a sale of a business capable of being carried on in its own right will not qualify for entrepreneurs’ relief. The considerable  case law on this subject is discussed Here For these purposes business means any trade or profession, but not the letting of property other than as furnished holiday lettings –link to separate FHL page in the UK or EEA. For more detailed coverage of this point see Difference between trading and investment business for Entrepreneurs' relief

From 3 December 2014 gains on the disposals of Goodwill are not eligible for Entrepreneurs’ relief where the disposal is to a close company and the individual making the disposal is a related party to the acquiring company. See Here

There is a risk of business assets failing to be eligible for entrepreneurs' relief. These relate to where assets are held by an individual partner, or partners, and are sold in the absence of a material disposal.

For example, in the First-tier Tribunal case of William S G Russell , the disposal of land by one member of a partnership was found not to be a disposal of whole or part of a business. However, had the partner disposed of a share of the partnership at the same time, condition A given in TCGA 1992, s 169K(2) would have been met. William S G Russell [2012] UKFTT 623 (TC) (subscription sensitive)

Conditions B and C of TCGA 1992, s 169K would still need to be met. For the purpose of condition B, it would be necessary to show that the disposal was sufficient to constitute a withdrawal from the business in some way. A token disposal may easily fall foul of this condition as there would be no real withdrawal from the business if broadly the same level of profits were retained.