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REBECCA CAVE considers the interaction of capital losses and entrepreneurs’ relief
KEY POINTS
- Entrepreneurs’ relief and the aggregation principle.
- What are the limits of the aggregation principle?
- The importance of timing at the cessation of a business.
- The interaction of entrepreneurs’ relief and capital losses.
Entrepreneurs’ relief (ER) was slotted into our capital gains tax code just a year ago on 6 April 2008 but problems with its operation are already emerging.
A particular area of confusion is the interaction of the relief and capital losses. In this article I outline the mechanisms that exist within the ER code for dealing with losses and highlight the ‘bear traps’ that lie in wait for taxpayers who dare to use the relief.
The legislative references are to TCGA 1992 unless otherwise stated.
Aggregation of losses and gains
Entrepreneurs’ relief applies to the net profits from a...
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