Finance Bill

I am grateful to hon. Members for tabling amendments in these technically complicated areas. It is important to use this stage of the Bill's passage to ensure that the meaning is entirely clear. I am sure that my right hon. Friend the Financial Secretary would want me to put on record her gratitude for the conversation in Committee that led to our tabling Government amendment No. 29. That was a useful exchange, and we are pleased about that. Let me run through the amendments in order and give the Government's response. Amendments Nos. 89 to 91 would make it easier for people to qualify for entrepreneurs' relief under the rules for so-called associated disposals, which are, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, disposals of assets which individuals owned personally but which were used in a business that the individual carried on either in partnership or through their personal trading company. As he said, to qualify as an associated disposal three conditions have to be met. The amendments would remove entirely the condition that the disposal of the associated asset must take place as part and parcel of the individual's withdrawal from the wider business. I suspect that that was not sufficiently clear in the guidance, so I will take the opportunity to clarify it now. It is of course draft guidance, so we can revisit it. The disposal mentioned in the guidance is the disposal of the associated assets rather than the withdrawing from the general business. Entrepreneurs' relief is targeted at disposals of businesses and it is right that there must be a clear link between the individual's disposal of his interest in the business per se and any disposal of an associated asset that he let the business use. The first condition for relief on an associated disposal is, therefore, that the individual makes a disposal of his interest in the business. The second condition follows naturally from the first condition, and it is that the disposal of the interest in the business and the associated disposal of the asset are exactly that—associated. The hon. Gentleman says that the second condition is not clear. I do not agree, but it is a useful conversation to have. The condition sets out the factual test that must be satisfied. There must be a link—an association between the withdrawal from the business and the associated disposal of the asset. The House will want to know that the same condition existed in the rules for retirement relief and it did not cause any difficulty in that case. The hon. Gentleman said that condition B is always satisfied when condition A is satisfied. That is not the case, and perhaps he has misunderstood the guidance in this technical area. Condition B is not otiose. The disposal it refers to is the associated disposal, as I have said, so it is needed to establish the connection between the two disposals. That was the case for the old rules for retirement relief.