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What is the holding period for Entrepreneurs Relief?

Published in Business Asset Disposal Relief 2 mins read

The holding period for Entrepreneurs' Relief, now known as Business Asset Disposal Relief (BADR), requires that the qualifying business interest must have been held for at least 12 months prior to its sale.

Understanding Business Asset Disposal Relief (Formerly Entrepreneurs' Relief)

Business Asset Disposal Relief (BADR), previously known as Entrepreneurs' Relief, is a significant tax relief that applies a reduced Capital Gains Tax (CGT) rate of 10% on qualifying disposals. This relief is designed to encourage entrepreneurship by significantly lowering the tax burden when individuals sell their business or shares in their employer.

This reduced 10% CGT rate is considerably lower than the standard rates of Capital Gains Tax, making it a valuable relief for business owners and employees selling their stake.

Key Holding Period Requirement

To qualify for Business Asset Disposal Relief, the stringent holding period requirement dictates that the individual must have owned the business or shares for a minimum continuous period of 12 months leading up to the date of sale. This condition ensures that the relief is granted for genuine long-term business engagements rather than short-term speculative investments.

Specifics of the Holding Period:

  • Duration: At least 12 months.
  • Timing: The 12-month period must immediately precede the date of disposal (sale).
  • Asset Type: Applies to the sale of a business or shares in an employer's company.

This consistent holding period is a fundamental criterion for claiming the relief and benefiting from the reduced 10% Capital Gains Tax rate.