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Entrepreneurs� Relief was renamed in Finance Act 2020 with effect from 6 April 2020. The new name is generally used in this guidance but should be read as applying to times before that date.

TCGA92/S169J

Business Asset Disposal Relief is available where there has been “a disposal of trust business assets�. TCGA92/S169J(1) provides that there is such a disposal where the following three conditions are satisfied.

1. The trustees of a settlement dispose of “settlement business assets�

“Settlement business assets� are assets which are part of the settled property of the settlement and are shares in or securities of a company (or interests in such shares or securities) or assets (or interests in such assets) that have been used for the purposes of a business - TCGA92/S169J(2).

1. An individual is a “qualifying beneficiary� of the settlement

A “qualifying beneficiary� is an individual who has an interest in possession (other than an interest in possession which has a fixed term) in the whole of the settled property of the settlement, or in a part of the settled property that contains the settlement business assets disposed of - TCGA92/S169J(3). This condition was considered by the Court of Appeal in the case, The Quentin Skinner 2015 Settlement L & Ors v Revenue and Customs [2022] EWCA Civ 1222.

1. One or other of two “relevant conditions� is satisfied

The first “relevant condition� must be satisfied in cases where the settlement business assets disposed of are shares in or securities of a company (or interests in such shares or securities).

The condition applies to the qualifying beneficiary the tests that would have applied under TCGA92/S169I(6) or (7) (see CG63975) if the qualifying beneficiary were an individual making a claim for Business Asset Disposal Relief in relation to a disposal of the shares or securities (or interests in such shares or securities). Thus throughout a period of 2 years ending within the 3 years up to the date of the disposal - TCGA92/S169J(4):

• the company must be the qualifying beneficiary’s “personal companyâ€� - see CG64050
• the company must be a trading company or the holding company of a trading group - see CG64060, and
• the qualifying beneficiary must be an officer or employee of the company or of one or more companies that are members of the group - see CG64110.

The second “relevant condition� must be satisfied in cases where the settlement business assets are assets, or interests in assets, that have been used for the purposes of a business. The condition applies, in relation to the qualifying beneficiary, broadly the same tests under TCGA92/S169I(3) and (4) as would apply to an individual making a claim for Business Asset Disposal Relief in respect of a disposal of the assets. The condition is that - TCGA92/S169J(5):

• throughout a period of 2 years ending within the 3 years up to the date of the disposal, the settlement business assets must be used for the purposes of a business carried on by the qualifying beneficiary, and
• the qualifying beneficiary must cease to carry on the business at some time during that 3 year period.

Where settlement business assets are disposed of and the qualifying beneficiary is a member of a partnership that carries on the business, the qualifying beneficiary is treated as ceasing to carry on the business either when the qualifying beneficiary ceases to be a member of the partnership, or when the partnership ceases to carry on the business - TCGA92/S169J(5).

References to the period of 2 years were only 1 year for disposals before 6 April 2019. If however the date of disposal is on or after 6 April 2019 and the business ceased to be carried on before 29 October 2018 then the relevant period remains as 1 year. See CG63975 for further detail.

See CG64140 where there is a disposal of trust business assets and there is at least one other beneficiary apart from the qualifying beneficiary.