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Entrepreneur's Relief

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Entrepreneur's Relief

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by Tax Tutor.
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  • Author
    Posts
  • September 29, 2019 at 8:04 am #547584
    Jivesh Seeam
    Member
    • Topics: 19
    • Replies: 6
    • ☆

    Dear Sir

    I am having an issue regarding Entrepreneur relief. Question is as follows:

    On 30 June 2018, Michael sold a business that he had run as a sole trader since 1 Jan 2014. He realised the following gains and losses on the chargeable assets of the business:

    Goodwill 60,000.

    Freehold Property 64,000

    Storage Unit (13,000)

    The Goodwill has been built up since 1 Jan 2014. The Freehold property had been acquired for 6 months prior to the date of disposal and the storage unit had been acquired for on 1 June 2015.

    Question:

    What is the net chargeable gain on the disposal of the sole trader business on 30 June 2018 that qualifies for entrepreneur relief?

    Answer is:

    Disposal of business:

    Goodwill 60,000
    Freehold 64,000
    Storage (13,000)
    Net ER=111,000

    but in my notes its written Assets must have been owned for 1 year minimum prior to the date of disposal, then how come the freehold property is included in the gains qualifying for ER as it has been acquired 6 months prior to disposal.

    Please help

    October 3, 2019 at 12:16 pm #548013
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    For ER to be available on the disposal of an unincorporated business it is the business that must have been owned by the individual for the minimum 12 month period.

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