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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Entrepreneurs’ Relief: calculation of the relief: gifts of business assets

A ‘material disposal of business assets’ may include gains which could qualify for Entrepreneurs’ Relief. Business asset(s) within that ‘material disposal’ may be disposed of as gifts and be the subject of a claim under TCGA192/S165 - see CG66450+. A claim under this provision acts to reduce the amount of any chargeable gain which would accrue to the transferor on the disposal, and similarly to reduce the amount of the consideration for which the transferee would be regarded for the purposes of capital gains tax as having acquired the asset.

If the whole of the assets comprised in the ‘material disposal’ for the purposes of Entrepreneurs’ Relief are gifted and the subject of a claim under TCGA192/S165 then no chargeable gain will arise at that time. In consequence there will be no ‘relevant gain’ for the purposes of TCGA92/S169N (1) - see CG64125 - and a claim to Entrepreneurs’ Relief would not be appropriate.

If however only part of the assets comprised in the ‘material disposal’ for the purposes of Entrepreneurs’ Relief are gifted and the subject of a claim under TCGA192/S165 then a chargeable gain will remain at that time and a claim to Entrepreneurs’ Relief may be made in respect of the amount of gain that remains chargeable.

On any subsequent disposal of the gifted assets by the transferee any gain is calculated in the normal way. This gain may qualify for Entrepreneurs’ Relief if the relevant conditions are satisfied in respect of the disposal by the transferee.