Tx notes fa22 Final

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Chapter 14
CAPITAL GAINS TAX – INDIVIDUALS 
– RELIEFS 
1. Introduction 
Reliefs from capital gains tax are important. Some reliefs reduce the rate at which tax is paid, 
some exempt a gain from tax and some defer the payment of the tax. The main reliefs include:
๏
Business Asset disposal relief
๏
Investors relief
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Rollover relief
๏
Gift relief
๏
Private Residence and letting relief
2. Business Asset Disposal relief 
2.1. Introduction 
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This relief is available for individuals disposing of a business or part of a business.
๏
The relief covers the 
first £1m
of qualifying gains that an individual makes during 
their 
lifetime. 
This qualifying gain is taxed at a capital gains 
tax rate of 10%
regardless of a 
persons taxable income, with any gains in excess of the limit being charged at 20%.
2.2. Conditions 
(a)
The assets must have been owned for 2 years prior to the date of disposal
(b)
The relief is available on:
‣
A disposal of the whole or part of a business run as an unincorporated business (sole 
trader or partnership). The relief is not therefore available if a trader simply disposes of an 
asset that is used in the trade (but see next point on sale of assets post cessation of 
trading) The assets must be used for the purpose of the business, so the relief is not 
available on investments.
‣
Individual business assets of the individuals’ or partnerships’ trading business that has 
now ceased. Note the disposal of assets must take place within three years of the 
cessation of trade.
‣
The disposal of shares in a trading company where the individual has at least a 5% 
shareholding in the company AND is also an employee (part time or full time) of the 
company for the 24 months prior to disposal. There is no restriction of the relief if the 
company owns investments. The company is either a trading company or it is not, there 
is no apportionment of the gain eligible for relief.

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