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What does Business “Asset Disposal Relief” mean?

Business Asset Disposal Relief lowers Capital Gains Tax (CGT). It applies to disposals of qualified business assets after 6 April 2008. As long as you meet the qualifying conditions during a 2-year period, either prior to disposal or on the date that the business was dissolved, it will reduce the amount of Capital Gains Tax. For disposals occurring on or after April 6, 2008, the lifetime limit for qualifying capital gains is as follows:

Who can get Asset Disposal Relief?

Individuals and trustees of settlements can apply for Business . However, it is not available to companies. It is also not available in the case of a trust where the whole trust is a discretionary settlement. Only personal representatives of deceased people can claim this relief if the disposal occurred while the deceased person was still alive. For more information about trustees of settlements, please refer to the Qualifying Conditions.

Asset Disposal Relief Claims

Business can be claimed by either the individual, or in the case where trustees of settlements, jointly, by the trustees as well as the qualifying beneficiary. HMRC must receive a written claim by you within one year of the end of the tax-year in which the qualifying disposal took place. A claim for Business must be filed by 31 January 2023 if there is a qualifying disposal of a business in the tax years 2020-2021 (which ends on 5 April 2021). Within the prescribed time frame, a claim for BusinessĀ  can be modified or withdrawn.

How do you claim?

Spouses and civil partners can each file a claim. Each of them is entitled to Business , up to the maximum amount for an individual (see Individuals), provided they meet the qualifying conditions.

Individuals

You should claim Business Asset DisposalRelief if you are able to do so in your 2020-2021 tax return. You can also claim Business Asset DisposalRelief from HMRC by filling out Section A of the Claim For Business Asset Relief form.

Trustees of a Settlement Asset Disposal Relief

The trustees of a settlement have to jointly file a claim with the qualifying beneficiary in order for them to dispose of the settlement. HMRC may accept joint claims by submitting a written request or filling out the Claim for development manager salary Asset Disposal Relief Form. The qualifying beneficiary should complete Section A, and the trustees should complete section B.

Asset Disposal Relief Amount

CGT will be applied to qualifying gains that exceed the lifetime limit if you are entitled to Business Asset Disposal Relief. Different rules apply to disposals made prior to 22 June 2010. Further details can be found in the Capital Gains Tax Manual.

The total amount of qualifying gains and all other gains that Business Asset Disposal Relief Relief was claimed will exceed the lifetime limit at the time of your disposal. This excess will then be subject to tax at the normal rate for CGT when your gains accrue. More information is available at How relief is calculated.

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