I sold the assets (fixtures and fittings) and goodwill in my business in the tax year 2017/18. However, I did not sell the shares in my business. The above were purchased out of the company, but I retained full shares and ownership within the limited company. I also sold a commercial property within the overall transaction. The property was used as the premises for the business. This property was owned personally by me and other directors/shareholders of the business. The property was lent to the business and used wholly and exclusively for the business throughout its ownership, with no rent charged by the directors/shareholders. Would the sale of this property qualify for entrepreneurs’ relief?
Arthur Weller replies:
It seems to me that the person asking the question is looking for entrepreneurs’ relief (ER) on an ‘associated disposal’. This states that if a person disposes of their business or shares in their trading company, and at the same time they dispose of a personally-owned property used by the business, they can claim ER on the gain on the property. However, this is not the case here, if I understand correctly. Here the person did not sell their business, nor did they sell their shares. It was the company that sold the business. The person in their individual capacity only sold the property and nothing else. In such a case, ER will not apply.
This question was first printed in Business Tax Insider in June 2019.