Entrepreneurs' relief for trusts

Trustees are able to claim entrepreneurs'
relief on the disposal of business assets held by them in the same manner that
individuals can. There is no provision that would permit personal
representatives to qualify for entrepreneurs' relief.

In order for the shares or securities to
qualify for entrepreneurs' relief certain conditions –link 9
must be met.  In addition, at the time of the disposal a ‘qualifying beneficiary’
must have an interest in possession ( ie a present right to present enjoyment)
in the shares or securities (and not merely for a fixed term) at the time of
disposal and the company must be the ‘personal company’ –link 9 of
the qualifying beneficiary. The
time of disposal will, in most cases, be the date that an agreement to sell the
shares is signed, rather than the date of completion of the sale if this is
later. Accordingly the interest could be created immediately prior to sale and
might even be a revocable interest.

In the case of jointly held shares, each
joint shareholder is regarded as owning a number of shares in proportion to the
size of his or her joint shareholding.

The qualifying beneficiary and ownership conditions
must be satisfied for a period of at least one year, ending not earlier than
three years before the date of the disposal. This allows the trustees to
benefit from relief on the sale of shares in a company that has stopped trading
within the last three years, for example. It also allows the trustees to
qualify for relief on the sale of shares even though the company in question is
no longer the ‘personal company’ of the qualifying beneficiary at the time of
the disposal. In this respect the rules for trusts are more generous than the
rules that apply to an individual.

For the position where more than one beneficiary has an interest in the asset see Here

### Disposals of business assets

Trustees can also qualify for entrepreneurs'
relief on a disposal of business assets, meaning assets used in a business by a
qualifying beneficiary, or by a partnership of which the qualifying beneficiary
is a partner.

The assets must be used by the business or
partnership for a period of at least one year, ending not earlier than three
years prior to the date of the disposal.

In addition, the qualifying beneficiary must
cease to carry on the business, either on the date of the disposal or within
the period of three years before that date. In the case of a partnership, this
could be because the partnership ceases trading, or because the qualifying
beneficiary ceases to be a partner.

### How the lifeime limit works for trust gains

See Here for commentary on how the lifetime limit works for trust gains and for mixed trust/individual gains

### Trustee claims for entrepreneurs' relief

Unlike individuals, the trustees are not
entitled to their own individual entrepreneurs' relief allowance. Instead, the
trustees must use the qualifying beneficiary’s allowance, and therefore must
make a joint claim with the beneficiary in order to do so. Each individual has
a lifetime limit  see here which is the amount of gains that can be
subject to entrepreneurs' relief. TCGA 1992, s
169N (8)

If the qualifying beneficiary makes a
disposal qualifying for relief on the same day that the trustees do so, then
the gain arising to the trustees is deemed to arise after the gain arising to
the individual. In this way, the individual is able to obtain relief in
priority to the trustees.

If the trustees make a claim then this will
mean that the beneficiary will have a smaller allowance to carry forward to be
set against any future gains made by him or her personally (or by the trustees
of trusts of which he is a qualifying beneficiary).