What is Business Asset Disposal Relief when selling shares in your business?, image of a woman using a calculator to work out tax | Crunch

Business Asset Disposal Relief - formerly known as ‘Entrepreneurs’ Relief’ reduces the amount of Capital Gains Tax payable when you dispose of (sell) shares in all or part of your business.

It results in a tax rate of 10% on the value of the disposal. There’s no limit to how many times you can claim and you can claim up to £1 million of relief during your lifetime (prior to 6th April 2020 the lifetime limit was £10 million). The same rules apply regardless of the rate of income tax you pay.

Who can claim Business Asset Disposal Relief?

There’s a qualifying period to claim Business Asset Disposal Relief, which means the share disposal needs to have happened within two years of the end of the relevant tax year.

You’ll also need to meet all of the following conditions:

  1. The person disposing of shares must own at least 5% of the ordinary share capital of the company, which must entitle them to at least: 
  • 5% of the votes
  • 5% of the company’s distributable profits
  • 5% of the net assets on winding up.
  1. The person disposing of the shares must also be an officer or employee of the company, and all employment conditions must have been met for at least the 24 months leading up to the disposal.
  2. The company must have traded in the 24 months leading up to the date of the share disposal.

Where the company intends to cease trading and dissolve, the relief can still be claimed provided:

  • The distribution of any assets in the company is taxed as a capital distribution and not as income
  • The distribution takes place within three years of when the company ceased trading
  • The qualifying conditions (1, 2 and 3 above) were met in the 24 months prior to the company ceasing to trade.

Deadlines for claiming Business Asset Disposal Relief

To avoid missing the boat, you need to claim Business Asset Disposal Relief by the first anniversary of the 31st January following the tax year of the disposal of shares:

Tax year ended Deadline to claim
5th April 2022 (2021/22 tax year) 31st January 2024
5th April 2021 (2020/21 tax year) 31st January 2023
5th April 2020 (2019/20 tax year) 31st January 2022

How to claim Entrepreneurs’ Relief

You can make a claim on your annual Self Assessment return in the supplementary ‘Capital Gains Summary’ section. However, seeking advice beforehand from an accountant is highly recommended. If you’re wanting information on how to value your business read our article “Six simple ways to value a business”.

Other Business Asset Disposal Relief rules apply if selling other assets (i.e. not shares). Please speak with your accountant for bespoke advice in this area.

As always, this article is only provided for general information, so for specific advice on your individual circumstances, please speak with your accountant.

Speak to an accounting expert

If you're unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.
team photo off all crunch team
Share this post
Tom West
Community and Social Manager
Updated on
December 14, 2022

Knowledge Hubs

Speak to the experts

Our UK based team of experts are ready to help you find the best accounting package for you and your business.

icon of a green tick
Certified Accountants
icon of a green tick
HMRC Approved
Senior Sales Advisor
Book a meeting
Crunch Pro Tip
Speak to an accounting expert

If you're unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.

Crunch Pro Tip
Using cloud-based accountancy software to manage your finances gives any small business a big advantage!

At Crunch we provide affordable cutting-edge, easy-to-use software with real human support from expert chartered accountants. That’s probably why 81% of our clients would recommend Crunch.

Crunch Pro Tip
Did you know - you have access to a Chartered Certified accountant for free on our paid subscriptions?

Book a call with our one accountants and get your questions answered. Just £24.50 +VAT for Crunch Free users.

Crunch Pro Tip
Did you know - Your Self Assessment has to be filed by the 31st of January deadline?

Crunch’s Self Assessment service provides an expert accountant to complete, check, and file your Self Assessment for you for just £140 +VAT.

Crunch Pro Tip
Did you know - We have a free plan that is great for sole traders and limited companies?

Why not see for yourself? It’s simple and easy to use and 100% free.