Business Asset Disposal Relief on Liquidation in the United Kingdom

Business Asset Disposal Relief reduces the amount of Capital Gains Tax (CGT) on a disposal of qualifying business assets on or after 6 April 2008, as long as you have met the qualifying conditions throughout a 2 year qualifying period either up to the date of disposal or the date the business ceased. Business Asset Disposal Relief was known as Entrepreneurs’ Relief before 6 April 2020.

In order to take advantage of this tax relief, the company needs to go into a solvent liquidation process [Members’ Voluntary Liquidation-MVL] and the Liquidator will make capital distributions to shareholders, thereby enabling them to make the Business Asset Disposal Relief claim in their own Tax Returns.

Who can claim relief

Business Asset Disposal Relief is available to individuals and some trustees of settlements, but it’s not available to companies or in relation to a trust where the entire trust is a discretionary settlement. Personal Representatives of deceased persons can only claim if the disposal took place whilst the deceased person was alive.

Business Asset Disposal Relief must be claimed, either by the individual or, in the case of trustees of settlements, jointly by the trustees and the qualifying beneficiary.

Claiming relief

To claim Business Asset Disposal Relief you have to meet the relevant qualifying conditions throughout a period of 2 years. This period is referred to in this helpsheet as the ‘qualifying period’. It ends with the date when you disposed of the asset, or an interest in the asset for which you want relief, or in some circumstances the date when the business ceased, if that was earlier.

Here at Simple Liquidation, we can help you if you are considering winding up a solvent company or declaring bankruptcy. For more information on how our professional insolvency practitioners may be able to help your business, contact us today.