CG17898 - Taper relief: business asset

TCGA92/SCHA1/PARA4 & TCGA92/SCHA1/PARA5

The basic rule is that:

• a holding of shares in a company is a business asset where the company is a qualifying company by reference to an individual, the trustees of a settlement or an individual's personal representatives. The definition of a qualifying company has changed over time, see CG17930 +;
• the conditions for any other asset to be a business asset have also changed over time. From 6 April 2004, for an individual, an asset is a business asset if it is used for the purposes of
• • a trade carried on by an individual,
  • a trade carried on by certain types of partnership,
  • a trade carried on by the trustees of a settlement,
  • a trade carried on by a deceased person's personal representatives,
  • an office or employment held by an individual with a person carrying on a trade, or
  • a trade carried on by a company which is a qualifying company by reference to the individual who owns the asset, or by a member of a trading group whose holding company is his or her qualifying company.

See CG17937 for an introduction to the more detailed rules, including those applying before 6 April 2004.

There are different rules to determine whether an asset owned by the following is a business asset

The rules to determine whether or not an asset is a business asset must be applied throughout the relevant period of ownership, see CG17925 +.

These basic rules are modified where:

• the disposal is made by trustees and there are non-qualifying beneficiaries, see CG17968;
• the disposal is made by trustees and the settled property is derived from a company, see CG17946; or
• the asset is used as part of an ancillary trust fund for a member of Lloyd's, see CG17941.

If you discover that the income from business other than a trade or furnished holiday letting has been assessed under Case 1, you should submit your file to Capital Gains Technical Group, see also CG63253.