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Will taxpayer be able to claim ER on whole gain?

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Taxpayer acquired 40% share in a trading partnership several years ago buying 40% of the land and property off a retiring partner. Taxpayer aquired another 10% share six months ago buying 10% of the land and property off a retiring partner. Taxpayer has decided to retire from the business and sell what is now their 50% share of land and buildings. Are they entitled to Entrepreneurs' Relief on the entire gain, or only the 40% they've owned for more than 2 years? I've looked through HMRC manuals and it is not clear. I have spoken to HMRC and they say it can only be claimed on the 40% and not the 10% held for less than 2 years.

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By 356B
26th Sep 2019 11:12

I agree with HMRC. (never thought I'd write that). The relief is available AFTER two years.

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Replying to 356B:
By SteveHa
26th Sep 2019 11:55

I disagree. The requirement is that it is a disposal of a business (or business asset) used in a business owned by the individual for the qualifying period.

TCGA S169(I)(8) states that, "For the purpose of this section:-

c) at any time when a business is carried on by a partnership, the business is to be treated as owned by each individual who is at that time a member of the partnership"

This would effectively cover the whole business for each partner. As long as some of the disposal can qualify, it all can.

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By ireallyshouldknowthisbut
26th Sep 2019 11:56


I assume you are coming at this from the POV of whether this is one or two computations? Ie one for 40% and one for the 10%, or just one for 50%?

There was a discussion about this not so long ago about let property, and i think I got it wrong in asserting it was two comps.

If you do it as one computation, treating the extra 10% as an enhancement, then you would reach the conclusion that full ER is available.

If you do it as two, you wont get any ER on the 10%.

I think that would be a fertile area to home in on.

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By AnnAccountant
26th Sep 2019 12:09

Similarly, once a shareholder has a qualifying shareholding in a personal company, they can acquire further shares - and a sale of those further shares will qualify for ER even if held for a day.

The solution to the kind of questions that the textbooks don't answer can be found by reading down the leg to see exactly how it implements the relief.

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