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Entrepreneurs relief

I have a now employee (self-employed) who sold his business back in August for just over £32k

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I have a now employee who was (self-employed) who sold his business back in August for just over £32k, can he claim entrepreneurs relief on this and how?  as I do not see it on his tax return.  I am just helping him out now he has come to work for us and he has not got an accountant, i've not dealt with it before.

 

Replies (31)

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By Tax Dragon
11th Apr 2022 19:14

Why would he show his new employer his 2021/22 tax return? He's done very well completing it so quickly, btw.

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Replying to Tax Dragon:
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By Tax Dragon
11th Apr 2022 19:17

Also, given you can't actually help him without help yourself, I wonder how much help the help you give him will be. Remind me a little... why did he ask you?

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By Tax Dragon
11th Apr 2022 19:19

In short, if you are an employer, I think you need an accountant and your accountant might well be able to help your employee.

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By Wanderer
11th Apr 2022 19:23

My friend has a car that's not working. Can I fix it and how? I'm just helping him out. I've never fixed a car before, but he hasn't got a mechanic.

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By sarah.uttridge
11th Apr 2022 20:25

Thanks both very helpful!

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By David Ex
11th Apr 2022 20:36

To be fair, if he has £32,000, he can afford to engage an accountant.

I believe a disposal post April 2020 will not attract Entrepreneurs’ Relief. A good accountant will, however, be able to advise on potential alternative reliefs.

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Replying to David Ex:
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By Paul Crowley
11th Apr 2022 23:01

A BADR reply than the others so far

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JCACE
By jcace
11th Apr 2022 21:16

Hi Sarah
Your employee would be best advised to speak to a local, friendly accountant (they do exist). Such an accountant should be able to help calculate any gain, advise on any available reliefs, calculate tax and (help) fill in the tax return etc. He or she should also be able to ask your employee the relevant questions so as to obtain all the necessary and relevant facts.

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By Duhamel
11th Apr 2022 21:41

Some of these replies seem a touch disingenuous?

Perhaps business asset disposal relief may apply.

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Replying to Duhamel:
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By David Ex
11th Apr 2022 22:11

Duhamel wrote:

Some of these replies seem a touch disingenuous?

Which ones? Do tell.

It's a profoundly risky, and generally bad, idea for an employer with, by their own admission, inadequate knowledge to be offering "advice" to an employee using scraps of information from an anonymous internet forum. If that is being pointed out to the employer, then I see no problem. Hopefully saves the employer and employee "issues" 'down the road'.

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Replying to Duhamel:
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By Paul Crowley
12th Apr 2022 10:34

Apply to what?
We do not know what was sold
All we know is that the sold item is not a company because the employee was "self-employed"

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By Jane Wanless
11th Apr 2022 22:32

I can see that there's been a sale for £32k, but I don't see the cost of the business. Has there been a gain, and if so, what is it? It might be below the reporting thresholds and not need to go on the return.
Best to speak to an accountant and give the full circumstances.

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Replying to janewanless:
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By Tax Dragon
11th Apr 2022 22:53

janewanless wrote:

Has there been a gain, and if so, what is it?

Two very good questions disguised as one. What was sold? (Did the sale include stock? Capital assets? Etc) And what was the profit on sale?

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Replying to Tax Dragon:
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By Paul Crowley
11th Apr 2022 23:08

Spot on
Something that sales agents tend to forget about
What exactly is being sold to whom
The person, either seller or buyer, that decides the breakdown tends to get the better position.

This could just be the sale of a vehicle and equipment

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Replying to Paul Crowley:
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By Tax Dragon
11th Apr 2022 23:20

So my second question was premature... first comes the dreaded cash basis one.

On reflection, my suggestion to use the employer's accountant was misguided (albeit better than the OP's idea of using an internet forum); jcace made a better suggestion.

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By sarah.uttridge
12th Apr 2022 09:24

Thanks to those people who actually responded with intelligent answers, much appreciated. I don't feel the need to discuss why my employee has come to me and not engaged with an accountant yet and given the date there is no saying he wont, needless to say there were extenuating circumstances that led to me asking that question on the off chance I would get some helpful suggestions for him . Very disappointed though in the response I got from some people, I've never used this forum before and thought the knowledge of you all would help especially seeing as this is a professional forum, such a shame some people have to use knowledge to put others down!

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Replying to sarah.uttridge:
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By bernard michael
12th Apr 2022 09:37

sarah.uttridge wrote:

Thanks to those people who actually responded with intelligent answers, much appreciated. I don't feel the need to discuss why my employee has come to me and not engaged with an accountant yet and given the date there is no saying he wont, needless to say there were extenuating circumstances that led to me asking that question on the off chance I would get some helpful suggestions for him . Very disappointed though in the response I got from some people, I've never used this forum before and thought the knowledge of you all would help especially seeing as this is a professional forum, such a shame some people have to use knowledge to put others down!


It is a professional forum for accountants not to give out advice to non -accountants, which I assume you are one of judging by your statements and the question
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Replying to sarah.uttridge:
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By David Ex
12th Apr 2022 10:18

sarah.uttridge wrote:

Very disappointed though in the response I got from some people,

I know what you mean. Shocking that people won’t provide you with free professional advice.

You “don't feel the need to discuss why my employee has come to me”. Being like that isn’t going to endear you to anyone, is it?

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Replying to sarah.uttridge:
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By Paul Crowley
12th Apr 2022 10:30

You are clearly not is a postion to help the employee as you do not have the knowledge or experience
You supplied no useful detail in your post
The proceeds figure is meaningless without details of what was sold and Just so much more detail. There would not just be questions to ask but then further questions to ask based on the answers.
Not suitable at all for this medium
This question has no answer because it has no information
If you do not know what you are doing then send to an accountant that could have a two way conversation and the details could be sorted in half an hour
Do not go to the accountant on your own, take the employee because he is the one that knows the answers to the questions that will be asked

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Replying to Paul Crowley:
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By Tax Dragon
12th Apr 2022 11:30

Spot on (to coin a phrase).

I agree every sentence - save perhaps the last, as I'm not sure OP has any business going to the employee's accountant (unless paying the fee... another potential point of interest for the taxperson).

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Replying to Tax Dragon:
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By Paul Crowley
12th Apr 2022 16:58

Much appreciated
My concern on last line was OP being generous and going to OP's accountant with the intension of helping employee
Only employee can answer the questions needed to determine the position

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Replying to sarah.uttridge:
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By Leywood
12th Apr 2022 11:46

Wow, another one stomping feet and being rude when they dont get what they want.

You said yourself that you have no clue about the subject matter. ER doesnt even exist.

Aweb is not an Accountancy trainer. Nor is it a free Accountant.

You do this employee absolutely no favours whatsoever by getting involved in this in any way, shape or form other than pointing him towards an Accountant. That fact given in answers right from the start is the only intelligent and helpful answer.

You should learn that a little knowledge is a dangerous thing.

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Replying to Leywood:
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By Dib
12th Apr 2022 13:37

Oh, for Heaven's sake, we've been here before! It's "a little learning", not "a little knowledge" (Pope's eponymous poem).

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Replying to Dib:
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By Leywood
12th Apr 2022 16:51

Oops! Yes. I only got B in English Lit and dementia has set in.

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By accountaholic
12th Apr 2022 13:59

Seems to me as much foot stomping by the responders as the questioner.

Entrepreneur's relief has quite a few detailed conditions so it's not a simple answer. As several have pointed out this is under the broad umbrella of a potentially taxable gain, so the first question is how much of a gain it is, so you need to know the cost. Establishing the cost in itself can be a complex matter.

I suggest if you want to be helpful to your employee I would work out with your best efforts the minimum and maximum tax he/she might pay, and that gives an idea of what's at stake to colour whether paid-for advice is appropriate. Then step back and tell them it's not your area of expertise and it's ultimately their responsibilityto get it right.

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Replying to accountaholic:
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By DKB-Sheffield
12th Apr 2022 15:22

To be fair to those 'foot stomping respondants', this is in the interests of the OP, and the new employee! The OP clearly lacks significant knowledge in this area - not least the reference to Entrepreneur's Relief (ER) which, as you will know was superceded by Business Asset Disposals Relief (BADR) in 2020/21.

Whilst it may seem cruel to refuse to answer the OP's question, it is also just as cruel to provide an answer - given the lack of information provided.

Were the OP to advise the new employee (remembering that the employee has thus far likely had no track record, has little "loyalty", may not make it through the trial period, and may not be entirely trustworthy), they may be setting up for a fall furtehr down the line. Incorrect advice may lead to the OP, and/ or their employer, being liable to damages - were that advice to be incorrect.

The employee, on the other hand, will be taking a risk by having their own tax affairs handled by someone who is not comfortable dealing with the query. Were it to go wrong, this could be a costly error for the employee - something they may not wish to pursue against an employer (or their employee). Besides, were I the employee, I'm not sure I'd want my employer to know the ins and outs of my tax affairs (which is what will be required to get this right)!

Notwithstanding the above, we do not know the specific circumstances of the OP. Are they a member of a PB? If so, providing advice outside of their knowledge is generally forbidden (not to mention, they may inadvertently land themselves with MLR responsibilities).

The best advice out there is for the employee - if he/ she so choses - to approach an accountant. Anything over and above that - including providing calculations - may be construed as tax advice!

It's not about what the OP could provide, it's what they should provide! I could provide my clients with advice on building regulations, but my 'knowledge' suggests I shouldn't

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Replying to DKB-Sheffield:
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By I'msorryIhaven'taclue
13th Apr 2022 12:58

DKB-Sheffield wrote:

Notwithstanding the above, we do not know the specific circumstances of the OP. Are they a member of a PB? If so, providing advice outside of their knowledge is generally forbidden (not to mention, they may inadvertently land themselves with MLR responsibilities).

And not to mention the OP might (if a member of a PB or even if employed in any semi-senior financial capacity) land her employer in the soup to the extent that the employer might become vicariously liable for any negligent advice she dishes out.

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Replying to accountaholic:
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By Leywood
12th Apr 2022 16:48

'best efforts'

Seriously?! The 'step back and tell them it's not your area of expertise' should have been said at the first instance.

Accountants/Tax advisors should not practice on fee paying clients, nor on poor sap employees, where there is no supervision in place to check what is being calculated/suggested.

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Replying to accountaholic:
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By David Ex
13th Apr 2022 11:43

accountaholic wrote:

Entrepreneur's relief has quite a few detailed conditions so it's not a simple answer.

It’s an extremely simple answer given that ER didn’t exist at the time of the transaction. If such a fundamental point is missed, you’ve got to just stop digging.

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Replying to David Ex:
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By accountaholic
13th Apr 2022 12:53

I consider my knuckles justifiably rapped on the terminology. My answer's still the same though, there are just as detailed conditions in BADR.

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paddle steamer
By DJKL
13th Apr 2022 12:15

What did he sell re this business sale, what types of assets, how was consideration split amongst these types of assets might be pertinent?

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