Chris Holmes and Ben Handley in our London Tax Group authored “Back to basics: Incorporation relief”, published by Tax Journal on 22 January 2021.
Incorporation Relief (IR) allows, in certain acceptable circumstances, business owners the flexibility to transfer their trade to a company without crystallising a dry Capital Gains Tax (CGT) charge. Throughout the tax legislation, there are similar examples where governments wish to support business by removing tax as a barrier in their commercial development. In most such cases, legislation has been drafted with a requirement for there to be a trade, with conditions to deny or limit the relief for non-trading activities. In contrast, IR applies to ‘businesses’, and therefore the relief has a wider application. IR effectively enables the business owner to defer the gain arising on incorporation until their exit from the business.
The article includes sections on:
- The purpose of incorporation relief
- How the relief works
- Points to watch in practice
- Recent developments
- Concluding thoughts.
We trust that you will find the article informative and interesting.
For more information, or for assistance, please contact Chris Holmes, or Ben Handley.
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