Qualifying period for entrepreneurs’ relief extended
Minimum qualifying period extended from one to two years.
Legislation will be introduced in Finance Bill 2018-19 for disposal made on or after 6 April 2019, to increases this minimum period throughout which certain conditions must be met to be eligible for entrepreneurs relief from one year to two years. There are special provisions for cases where the business ceased before 29 October 2018.
The periods will increase from one year to two years for:
Disposal of whole or part of the business, by an individual who either owns the business directly or in partnership throughout the period of two years ending with the date of disposal.
Disposal of an asset where a claimant has disposed of an asset used at the time the business ceased, the business must have been carried on by the claimant for two years
Disposal of shares where a claimant has disposed of the shares in a company, the qualifying conditions in relation to companies must have been met for three years ending at the time of the disposal
Disposal of an asset where a claimant has disposed of an asset used in a business after disposing of the business (a ‘disposal associated with a relevant material disposal’), that asset must have been used in the business for two years
Disposal of a trust business asset and the qualifying conditions in relation to trust business assets must have been met for two years.
Transitional rules will apply where the claimant’s business ceased before 29 October 2018, so that the old one year period will continue to apply to claims on disposals of assets within three years of cessation. The business will need to have been carried on for only one year prior to cessation.
Where the claimant’s personal company ceased to be a trading company (or the holding company of a trading group) before 29 October 2018 the old one year period will continue to apply to disposals of shares within three years of cessation. The company will need to have been a trading company (etc) for only one year prior to cessation.