CG64065 | Business Asset Disposal Relief: trading company and holding company of a trading group - meaning of preparing to carry on a trade

Entrepreneurs’ Relief was renamed in Finance Act 2020 with effect from 6 April 2020. The new name is generally used in this guidance but should be read as applying to times before that date.

TCGA92/S165A (4) (b) and TCGA92/S165A (9) (b)

TCGA92/S165A (4) (b) and TCGA92/S165A (9) (b) specifically provides that trading activities include activities for the purposes of a trade that a company, or group, is preparing to carry on. This encompasses the situation where a particular trade is about to be started but the company, or group, has to carry out certain activities first. It also covers cases where an existing trade, which is currently being carried on by another person, will be acquired. The trading activities here may include one or more of: developing a business plan for carrying on the trade, acquiring premises, hiring staff, ordering materials and incurring pre-trading expenditure for the purposes of the trade to be carried on.