Entrepreneurs’ Relief

Entrepreneurs’ Relief

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A client is a general practitioner who is running his own private clinic since 1994. He wishes to gift the business assets to his son. The business owns freehold of commercial building. Would he be able to claim entrepreneur’s relief by gifting the business to his son?

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By johngroganjga
08th Apr 2014 09:48

If entrepreneur's relief is available it is not precluded by reason of the disposal not being at arm's length.

Are you asking about the availability of entrepreneur's relief to this transferor in relation to these assets per se - or just whether it is different if the disposal is not at arm's length?

Have you considered holdover relief?

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By jamesallenbaker
08th Apr 2014 10:00

His son intended to sell the freehold soon after gifted to him. It make sense to claim entrepreneur's relief and pay 10% tax instead of claiming holdover relief and pay 28% tax by his son.

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By Steve Kesby
08th Apr 2014 10:25

Is the business continuing...

... or is it ceasing? If it's continuing, then you won't get ER, because you're just disposing of an asset not the business itself and for a sole trader ER is only available in respect of assets that are in use when the business ceases.

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By jamesallenbaker
08th Apr 2014 10:55

He is ceasing to trade, but not selling the business to anyone, just passing the freehold to his son.  

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By Steve Kesby
08th Apr 2014 15:07

In that case...

... if the business (having been carried on from the freehold property for at least a year) ceases and then the property is gifted to the son (within 3 years of cessation), you will get a market value disposal that attracts entrepreneur's relief.

Why transfer it to the son for the son to sell it though. You'll be paying solicitors for two conveyances. Why doesn't dad sell it and give the son the cash?

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