Reinvestment in Depreciating Assets:

TThomasShelby9h ago

I have a query regarding the following statement in the OpenTuition notes under Reinvestment in Depreciating Assets:

"Business Asset Disposal Relief is only available if any gains remaining after this relief are in relation to the disposal of the whole business."

This has confused me because BADR can also apply in other situations. For example, the notes elsewhere state that BADR is available on the disposal of part of a business that is capable of separate operation. Also, HMRC guidance indicates that BADR may be available on certain disposals of business assets after the business has ceased, provided the relevant conditions are met.

Shouldn't the statement therefore refer to qualifying BADR disposals rather than only the disposal of the whole business? Or is there a specific reason why the notes mention only the disposal of the whole business in the context of depreciating assets and Roll-over Relief?

AmandaPTutor4h ago#1

BADR was introduced several years ago to replace something called 'retirement relief' which covered situations in which an individual wanted to sell the business to potentially retire and then live off the proceeds of the sale.

When retirement relief was abolished, something called 'entrepreneurs' relief' took its place, and this relief was later renamed business asset disposal relief, but the basic premise remains the same (although there's no requirement to actually retire).

BADR is only available if the entire business is disposed of, or a part capable of separate operation.

So if I had a shop and I sold it off in its entirety, then as long as the other conditions are satisfied, I could claim BADR.

If I had three shops and sold one off in its entirety, then as this part of capable of separate operation (i.e. it can operate independently of the other two shops) then again, BADR could be claimed.

If I wanted to sell off my shop but nobody wanted to buy it in its entirety, so I closed the shop and sold off the assets piecemeal within three years of closing it, then again BADR could apply, but I would still be disposing of the entire business, just not to the same person.

If I decided (under each of the three scenarios above) that I wanted to buy an asset (depreciating or not)
to use in a trade and the conditions for rollover relief were satisfied, then I could claim rollover relief first, and then any gains remaining I could claim BADR on, again, subject to the conditions for BADR being satisfied.

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