Section A

Which of the following conditions is NOT required for an individual to qualify for Business Asset Disposal Relief (BADR) on the disposal of shares in a company?

Answer options:

The company must be a trading company or the holding company of a trading group.

The individual must be an officer or employee of the company.

The individual must hold at least 5% of the ordinary share capital and voting rights.

The individual must have held the shares for at least 3 years prior to disposal.

How to approach this question

Review the statutory conditions for BADR regarding share disposals: trading company, officer/employee status, 5% shareholding, and the qualifying holding period.

Full Answer

D.The individual must have held the shares for at least 3 years prior to disposal.✓ Correct

To qualify for Business Asset Disposal Relief (BADR) on the disposal of shares, the company must be a trading company, the individual must be an officer or employee, and they must hold at least 5% of the ordinary share capital and voting rights. These conditions must be met for a period of 2 years (not 3 years) leading up to the date of disposal.

Common mistakes

Confusing the 2-year BADR holding period with the 3-year reinvestment period for rollover relief.

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