Entrepreneurs' Relief

Eligibility

You may be able to pay less Capital Gains Tax when you sell (or ‘dispose of’) all or part of your business.

Entrepreneurs’ Relief means you’ll pay tax at 10% on all gains on qualifying assets.

If you’re selling all or part of your business

To qualify for relief, both of the following must apply:

  • you’re a sole trader or business partner
  • you’ve owned the business for at least one year before the date you sell it

The same conditions apply if you’re closing your business instead. You must also dispose of your business assets within 3 years to qualify for relief.

If you’re selling shares or securities

To qualify, both of the following must apply for at least one year before you sell your shares:

  • you’re an employee or office holder of the company (or one in the same group)
  • the company’s main activities are in trading (rather than non-trading activities like investment) - or it’s the holding company of a trading group

There are also other rules depending on whether or not the shares are from an Enterprise Management Incentive (EMI).

If the shares are from an EMI

You must have both:

  • bought the shares after 5 April 2013
  • been given the option to buy them at least one year before selling them

If the shares are not from an EMI

For at least one year before you sell your shares, the business must be a ‘personal company’. This means that you have at least 5% of the:

  • shares
  • voting rights
  • entitlement to profits that are available for distribution
  • entitlement to assets on winding up the company

If the business stops being a trading company

If the company stops being a trading company, you can still qualify for relief if you sell your shares within 3 years.

If you’re selling assets you lent to the business

To qualify, both of the following must apply:

  • you’ve sold at least 5% of your part of a business partnership or your shares in a personal company
  • you owned the assets but let your business partnership or personal company use them for at least one year up to the date you sold your business or shares - or the date the business closed

If you’re a trustee

You may also qualify if you’re a trustee selling assets held in the trust.