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Capital Gains Tax Reliefs for SMEs and Entrepreneurs 2020/21

Authors: Chris Williams and Satwaki Chanda

Edition: 2020/21

Publication Date: October 2020

Publisher: Bloomsbury Professional

Law As Stated At: 30 September 2020

Capital Gains Tax Reliefs for SMEs and Entrepreneurs 2020/21

Capital Gains Tax Reliefs for SMEs and Entrepreneurs 2020/21

This specialist technical information guides you through the reliefs available for your clients' capital transactions, compares and contrasts how different types of businesses can benefit and gives guidance on how to avoid the pitfalls put in place to prevent the abuse of those reliefs. It outlines the calculation, process and application of the key tools that allow gains to be deferred, held-over or extinguished, as well as addressing the use of capital losses which may arise. The emphasis is on business asset disposal relief (formerly entrepreneurs' relief), EIS, SEIS and social investment relief.

It is structured to reflect the changing needs of a business and its owners throughout the business lifecycle; from sole-trader to incorporation, expansion to a group, withdrawal of the founders, passing-on the business and disincorporation.

Brought up to date in line with Finance Act 2020, this update takes into account the following key developments:

  • The great change was the heavily-trailed restriction in entrepreneurs’ relief (ER) which was rebranded as business asset disposal relief (BADR). This carries a two-year qualifying period and £1 million lifetime limit on gains that qualify for relief (Chapter 5).
  • Intangibles untangled: The new commencement rules may appear straightforward in overview but the detail is devilishly tricky reading. For detailed analysis on this, see 12.60.