Entrepreneurs' Relief

The relief was renamed from Entrepreneurs' Relief to Business Asset Disposal Relief with effect from 6 April 2020, at the same time the lifetime limit on qualifying gains was cut from £10 million to £1 million. HMRC's helpsheet confirms the lifetime limit has moved several times since the relief began in 2008: £1 million for disposals from 6 April 2008, rising in stages to £10 million between 6 April 2011 and 10 March 2020, before being reduced back to £1 million for disposals on or after 11 March 2020, where it currently stands. The rate charged on qualifying gains within that limit has also changed: gains qualifying for the relief were taxed at 10% for disposals on or before 5 April 2025, rising to 14% for disposals between 6 April 2025 and 5 April 2026, and to 18% for disposals from 6 April 2026 onward.

To qualify on a sale of a sole trade or partnership interest, the seller must have been a sole trader or business partner who owned the business for at least two years up to the date of sale (or, on a closure, up to the date the business ceases, with assets then disposed of within three years). For a share sale, the seller generally needs to have been an employee or office holder of a trading company (or holding company of a trading group) and to have held at least 5% of the shares and voting rights for at least two years. The relief is not automatic — a claim must be made to HMRC, either in the relevant Self Assessment return or by writing to HMRC, and there is a statutory time limit: the claim must reach HMRC by the first anniversary of the 31 January following the end of the tax year of disposal.