A: To qualify for Business Asset Disposal Relief on a sale of shares in a company then ordinarily the shares must have been owned for a 2 year period before the disposal of the shares.
However, for share disposals made on or after 6 April 2019 the pre-incorporation period can, in certain circumstances, be taken into account when considering share ownership. The period of ownership of the sole trade or partnership business prior to the incorporation can be included as part of the taxpayer’s holding period for the shares, provided the shares were issued in exchange for the transfer of the business as a going concern, together with all the assets of the business, other than cash.
In short this means that if a transfer of the sole trade to the company qualified for Incorporation Relief (see Self Assessment helpsheet HS276) then the 2 year holding period for the shares can include the period when the trade was carried on by the individual prior to incorporation.
These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.
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