The directors or shareholders of a certain company who want to sell its assets in full or partially can take benefit of business asset disposal relief. Whenever a business sells its assets, it has to pay capital gains tax, and with the help of this relief, you can save significant fortunes which otherwise will end up in the state treasury. Your assets must qualify the process, and if they do, you can reduce your CGT to just 10%.
Do not confuse this relief with Entrepreneur’s reliefs, as they both are the same. Since 2020 it has been decided that now an individual can claim 10% CGT on a lifetime limit of £1 million of capital gains. Any gains made of £1 million or over will attract a CGT rate of the prevailing main rate (currently 20 % at 2019/2020 rates). Below are conditions that make you qualify for the exemption under entrepreneur relief:-
If your gain is less than £12,300 then you are not liable to pay any kind of tax as you will be exempted under the annual personal tax-free allowance.
If you make a payment to offset any business losses out of the money you get after selling the assets then that value can be used to pay fewer taxes.
The directors have to pay tax as per their proportion in the assets. If they hold 255 of the assets that are sold, then they have to pay only a 25% proportion of the CGT.
You need to pay tax only for the gains that you have from selling the assets. You only need to pay tax on the gains that are exceeding your tax-free allowance.
Who can claim it?
If you want to claim the business asset disposal relief then you must be a sole trader, business partner, shareholder, or owner of the company. If you do not qualify for this condition, then there is no provision to claim this benefit. Your claim depends on several factors related to the assets you are planning to dispose of. The assets that fall under this relief are shares, securities, leases, or even a part of your business. As there are many financial implications due to COVID-19 so you need to dispose of your assets within 3 years of starting the process of MVL.
How to claim Business Asset Disposal Relief?
If you want to claim this relief, then you need to do it through HMRC. It is very easy to claim it with the annual self-assessment tax return, and this is one of the most common ways used in the country to claim relief on asset disposal. As there is significant financial intervention by the government during the pandemic times, the process has not become more complicated. You should take the help of an experienced Insolvency Practitioner to guide you, and for that, you can get in touch with the team of Simple Liquidation today. Contact them using live-chat, email mail@Simpleliquidation.co.uk, or call 0800 246 5895 to get guidance for Business Asset Disposal Relief.
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