HMRC internal manual

Capital Gains Manual

Business Asset Disposal Relief: broad outline

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

Entrepreneurs’ Relief was renamed in Finance Act 2020 with effect from 6 April 2020.  The new name is generally used in this guidance but should be read as applying to times before that date.

For disposals occurring on or after 23 June 2010 gains which qualify for Business Asset Disposal Relief are charged at a rate of 10%.

For disposals from 6 April 2008 to 22 June 2010 gains which qualify for Business Asset Disposal Relief are reduced by 4/9th. The net amount is the chargeable gain and charged at the single rate of CGT.

The amount of Business Asset Disposal Relief is subject to a ‘lifetime’ limit of gains in respect of which the relief can be given. The amount of this ‘lifetime limit’ is -

  • for disposals from 6 April 2008 to 5 April 2010 - £1 million.
  • for disposals from 6 April 2010 to 22 June 2010 - £2 million, and
  • for disposals on or after 23 June 2010 to 5 April 2011 - £5 million
  • for disposals on or after 6 April 2011 to 10 March 2020 - £10 million
  • for disposals on or after 11 March 2020 - £1 million.

of gains that can qualify for Business Asset Disposal Relief. So, for any qualifying disposal, the amount of relief available depends on:

  • the extent to which gains relate to disposals of business assets (as opposed to investments), and
  • the total amount of relief given on any previous qualifying disposals.

The changes to the lifetime limit are not retrospective. If a person made a qualifying disposal of £3 million in 2009 and Business Asset Disposal Relief applied to reduce £1 million of those gains then the relief due is not affected by the later increases in the lifetime limit. If that person made a further qualifying disposal after the limit increased relief would be available within the new limit, taking into account the £1 million already used. However, if a further qualifying disposal is made on or after 11 March 2020, no further relief would be due as the person would have already exceeded the £1m lifetime limit applicable to disposals on or after that date.

See CG64125 for further detail including an example.

See CG63956 for guidance on reduction of lifetime limit from 11 March 2020.