Taxation of Chargeable Gains Act 1992 section 169U

Eligibility conditions for deferred business asset disposal relief

Section 169U sets out the conditions that must all be satisfied before business asset disposal relief (formerly known as entrepreneurs' relief) can apply to a gain that was previously deferred under the Enterprise Investment Scheme (EIS) or Social Investment Tax Relief (SITR) and has now come back into charge.

• A deferred gain must crystallise under EIS or SITR rules, and the original disposal that gave rise to the gain must have been a qualifying business disposal (such as a disposal of shares in a trading company or of business assets used in a trade).
• The individual who made the original business disposal must claim business asset disposal relief in respect of the crystallised gain by 31 January in the year following the tax year in which that gain accrues.
• The crystallised gain must be the very first portion of the deferred gain to come back into charge — if an earlier portion has already accrued without a relief claim, no subsequent claim can be made under these rules.
• Whether the original disposal qualified as a relevant business disposal is judged by the law in force at the time that disposal was actually made, not the law at the time the deferred gain later crystallises.