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Entrepreneurs’ relief on disposal of a surgery

Entrepreneurs’ relief (ER) is designed to give relief for capital gains tax on the disposal of interests in businesses and this relief may be extended to assets used in those businesses. This article examines the difficulty in obtaining relief for the disposal of a business asset, such as the surgery building, while the business is ongoing.

In the current climate, where practices are finding it difficult to attract new partners, property owning partners in particular, and where many practices are merging into shared premises or entering into sale and leaseback arrangements ER, and how to get it, is never far from our minds.

For a sole trader the position is simple, they cannot have ER for the disposal of a mere asset such as the surgery building. Relief is only available where the individual makes a disposal of business assets (s169I(2)) and that disposal is a material disposal of business assets (s169I(3) and (4)). Broadly speaking, the relief will only be available on the disposal of the surgery building when the business has ceased in the previous 36 months. This is because the building is not likely to be considered to be the whole or part of a business.