Mark McLaughlin looks at business asset disposal relief for capital gains tax purposes, and when a company’s activities might be non-trading to a ‘substantial’ extent.
Many business owners are familiar with business asset disposal relief (BADR), which offers individuals a capital gains tax rate of 10% on net chargeable gains, up to a lifetime limit of £1 million.
A claim for BADR is available on a material disposal of business assets. This article focusses on one category of business asset disposal, i.e., shares in a company. A disposal is ‘material’ for BADR purposes if one of four alternative conditions is met (i.e., A to D in the legislation). The most common one is Condition A. This is that throughout a two-year period ending with the date of disposal: the company is the individual’s personal company and is a trading company (or the holding company of a trading group), and the individual