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