Entrepreneurs' Relief: Things can only get BADR

United KingdomScotland

We have a couple of updates on our recent article following the Budget announcement that the lifetime limit for ER has been restricted to £1m for disposals on or after 11 March 2020.

Anti-forestalling loophole closed

We thought they had missed a trick here! The draft legislation counteracted attempts to lock in the previous £10m limit by way of uncompleted contracts or exchange of shares for shares in another company but did not catch share reorganisations within a single company. This has been spotted and the draft legislation in Schedule 2 of the Finance Bill now treats these in the same way as share exchanges, so an election made under s.169Q on or after 11 March 2020 to disapply reorganisation treatment for a reorganisation which took place on or after 6 April 2019 but before 11 March 2020 will result in the disposal being treated as taking place on the date of the election and therefore subject to the £1m lifetime limit.

BADR

From 6 April 2020 entrepreneurs’ relief is to be re-named business asset disposal relief, presumably with the less catchy moniker “BADR”. No reason is given.