Selling a second home or business asset in 2021? Beware of the taxman

By DTE Business Advisers

04 Feb 2021

With the Budget soon upon us at the beginning of March, it is a timely reminder to consider one of the most important capital gains tax reliefs available, particularly to those who are in business.

Capital Gains Tax (CGT)

By way of a reminder, the annual exemption for the current tax year is £12,300 for individuals. Please be aware that married couples and civil partners have a £12,300 exemption each. If your taxable income is less than £37,500 the capital gains tax rate for gains up to the remaining basic rate band allowance is 10%. Gains above that are at 20%. 

You will be aware that in recent times the Government have made the capital gains tax regime in relation to residential properties more draconian than ever. At present, gains from the sale of a residential property which is not your principal private residence (your second home) are taxed at rates of 18% if you are a basic rate taxpayer or 28% if you are a taxpayer paying tax at the higher or additional rate.

You hopefully are aware that the gains made on UK residential property must be reported and paid within 30 days of the sale being completed. 

Business Asset Disposal Relief (BADR)

BADR reduces the rate of capital gains tax due on disposal of all or part of your business from a headline rate of 20% to 10%. Those with a memory will recall that the relief was, until recently, known as Entrepreneurs’ Relief. 

The broad rule of qualification is you must have owned the business (or business asset) either as a shareholder, sole trader or been in a business partnership for the last 2 years.

If you are selling shares you may also qualify if you have been an employee or officer holder (director) of a qualifying trading company for 2 years up to the date you sell your shares. In addition, you must also have had at least 5% of both the nominal share capital and voting rights and also be entitled to at least 5% of either all distributions or 5% of the profits that are available for distribution in relation to the assets on winding up.       

If you are closing your business the same conditions apply and you must also dispose of any assets (or complete the winding-up of a business) within 3 years of the trade ceasing. Please note there is no cap on the number of times you can claim the relief, but you can only claim up to £1million of BADR in your lifetime. Any earlier disposals where Entrepreneurs’ Relief was claimed need to be taken into account in relation to this lifetime limit.

Finally, please note if you have never previously claimed BADR only the first £1 million will qualify for the 10% with the rest of the disposal taxable in the current tax year at 20/21 at 20%.

And finally, it is also worth remembering that if you have shares that are, for want of a better phrase “worthless”, you will be able to make a negligible value claim on any shares and utilise the loss against any gains made in the tax year. The end of the tax year is an opportune time to consider these ‘negligible value’ claims. 

**This article was originally posted on DTE website at https://www.dtegroup.com/news/blog/selling-a-second-home-or-business-asset-in-2021-beware-of-the-taxman/

Latest news

1

Management buyout at Suresite Group Steve Holden

Management buyout at Suresite Group

17 Oct 2025

2

Meet the influencers who have generated £2m sales for one company Helen and Richard Chalu new

Meet the influencers who have generated £2m sales for one company

16 Oct 2025

3

WHN strengthens position in prestigious legal guide Daniel Long

WHN strengthens position in prestigious legal guide

16 Oct 2025

4

Warden appoints new commercial manager to strengthen project delivery and growth Peter Heskine

Warden appoints new commercial manager to strengthen project delivery and growth

16 Oct 2025

5

Stockley's finds its sweet spot Stockley's front view

Stockley's finds its sweet spot

15 Oct 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Help to grow management course
Help to grow - barriers to growth.png.png
LBV Hub Seminars
26 Sep 2025 - 16 Dec 2025

Help to grow management course

Preston Campus , Preston , PR1 2HE

09:00 - 15:00

Women scaling up Blackpool Fylde and Wyre
LBV Hub Seminars
22 Oct 2025 - 09 Jan 2026

Women scaling up Blackpool Fylde and Wyre

The Small Business Academy, Blackpool, FY4 5JX

09:30 - 15:30

HR Essentials for pubs, bars and licensed venues
EventBrite NORi - 22nd Oct Webinar.png.png
LBV Hub Webinar
22 Oct 2025 - 22 Oct 2025

HR Essentials for pubs, bars and licensed venues

Online - Teams, Leyland, PR253XH

13:30 - 15:00

RISE - Lancashire's unique leadership programme for women
thumbnail_Emma Weston Illustration WENDY BOWERS RISE Illustrstion.jpg.jpg
LBV Hub Seminars
22 Oct 2025 - 18 Mar 2026

RISE - Lancashire's unique leadership programme for women

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:30 - 15:30

North West Business Expo 2025
https---cdn.evbuc.com-images-880456273-4862066883-1-original.20241022-105445.jpeg.jpg
LBV Hub Exhibitions
24 Oct 2025 - 24 Oct 2025

North West Business Expo 2025

Bolton Stadium Hotel, Bolton, BL6 6SF

09:00 - 15:00

Chamber Business Lunch – October
LBV Hub Networking
24 Oct 2025 - 24 Sep 2025

Chamber Business Lunch – October

Lancaster Golf Club, Lancaster, LA2 0AJ

11:00 - 13:30

Lancaster District Business Support Expo
Lancs-cham-logo.jpg.jpg
LBV Hub Networking
29 Oct 2025 - 29 Oct 2025

Lancaster District Business Support Expo

The Platform, Morecambe, LA4 4DB

10:00 - 15:00

Chamber Breakfast Networking – November
Lancs-cham-logo.jpg.jpg
LBV Hub Networking
06 Nov 2025 - 06 Nov 2025

Chamber Breakfast Networking – November

Porsche Centre South Lakes, Carnforth, LA6 1FW

08:30 - 10:30

Lancashire Police business update with The Police and Crime Commissioner
Lancs-cham-logo.jpg.jpg
LBV Hub Roundtables
10 Nov 2025 - 10 Nov 2025

Lancashire Police business update with The Police and Crime Commissioner

Lancaster Castle, Lancaster, LA1 1YN

14:00 - 16:00

AI, Creativity, and what it means to be human
2.jpg.jpg
LBV Hub Networking
11 Nov 2025 - 11 Nov 2025

AI, Creativity, and what it means to be human

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV124 Online Graphic
Subscribe now

Weekly news bulletin