Call Me Back

Business Incorporation Relief

UK’s premier property tax advisers & accountants, providing services related to Business incorporation relief It is possible to delay paying Capital Gains Tax if a business owner or partner transfers the business to another company in return for shares. Incorporation relief means that a business owner or partner won’t be liable to pay any tax until he / she sell or dispose of the shares.

Expert in Business Incorporation Relief

A business owner or business partner will be automatically eligible for Incorporation relief and don’t have to claim it. To compute the payable Capital Gains Tax, deduct the gain, made by selling the business, from the market value of shares received. Let’s understand this by an example; a business owner or partner transfers the business in return of shares worth £100,000 and the profit made is £60,000. If the shares are sold later, their cost for computation of Capital gains tax will be £40,000 (£100,000 – £60,000).

To qualify for Incorporation relief the two most important conditions are:
  • To be in a business partnership or operate as a sole trader
  • To transfer the business and all the /assets, apart from cash, in return for shares in a company

In certain cases, the owner / partner might receive shares and cash when transferring the business. It is also possible to get incorporation relief on the proportion of the business exchanged – Capital gains tax is payable on cash. To make it simple to understand, assume the value of the business, when it is transferred, is £100,000. 80% is received in shares and 20% in cash. In this transaction, profit / gain equal £50,000. Hence, 80% of gain from shares i.e. £40,000 (80% * £50,000) can be postponed until the shares are sold but capital gains tax will have to be paid on 20% of cash gain i.e. (20% * £50,000) while filing the next tax return.

Computation of incorporation relief

The following step will help with the computation of Incorporation relief

1

Step-1

We sum up all the consideration, i.e. any cash received and the market value of shares

2

Step-2

Computation of any Capital Gains on declarable assets such as goodwill and property

3

Step-3

Calculate the gain not liable to Capital Gains Tax: Gains not liable to Capital gains tax = Gains (computed in Step 2) * Market value of shares / Cash + Market value of shares The gains not chargeable are fundamentally rolled over.

4

Step-4

Calculating the deemed cost of new shares: Deemed cost of new shares = cost of shares – gain not rolled over (step 3)

square-office

What we do?

1

Tax saving advice to minimize the tax exposure of our clients and formulate the best tax agreements

2

Creating an environment where our clients face minimal business incorporation relief issues

3

Building trust in the market and helping clients with a streamlined process

Our Property Tax Accountants help businesses with formulating the complete structure and adopt the best possible approach to have maximum gains. With incorporation relief, we are basically deferring capital gains tax payable on the sale of taxable assets such as goodwill and property, and as a result reducing the acquisition cost of shares received for the transfer of business to another company. Thus, capital gains tax will only incur once the shares are sold.

Expert support around the UK

Our expert business team is always available to answer your questions and give you advice.

customers
10000 +

Clients

office-building
20 +

UK Offices

expert
80 +

Experts

See how dns can help You today.

Our team of Property Tax Accountants comprises with many years’ experience in the industry. We take pride in our many years of experience, as well as the diverse backgrounds of our team members. With former property lawyers, accountants, and financial advisers on board, we can assure you that our advice is of the highest quality and expertise.

Give us a call today on 03300 575 902 to speak to our advisors, we'll find the right accounts & tax solution for you.
Request a Callback

Award winning experts trusted by many

We're proud of our clients and their success. Find out more about them and the help and support we provide.

1

British Accountancy Awards

2

The Londan Asian Business Awards 2019

3

Investing in People Awards 2019

4

British Accountancy Awards 2018

5

Accounting Excellence Shortlisted Awards 2018

6

British Accountancy Awards 2017

7

The British Accountancy Awards 2013

8

The Contracting Awards 2019

9

British Accountancy Awards

10

The Contracting Awards 2020

11

The Association of Company Registration Agents

12

Accounting Excellence Client Service Awards 2020

13

Accounting Excellence Investing in People Awards 2020

14

The Contracting Awards 2020

15

The Contracting Awards 2020

16

Advisor Software Partner

17

The Contracting Awards 2020

Trusted reviews

Our goal is to provide the best service to all our clients, all the time. Read what our clients say about us.

I am writing this email as a token of appreciation for Manish Garg, who is our lead accountant for the past...

Ambarish V

We work with DNS Associates for 4 years now and we always had a feeling that our problems and questions are top...

Max Floor UK

DNS Associates provides cost effective and very professional services. My accountant Sneha Gurudutta has been...

Jivan Sharma

Very professional and efficient team. I will highly recommended to all small or big business owners...

Jhon Gill

I’m a new client and Debangshu Sarkar has been reliable, timely and informative to date. Very impressed...

Freddie Sam Webber

Excellent services, my account manager Amit Gupta always there for me, excellent work on time and take...

Ghofran Abdelrehem

I recently starteed my own company and in need of a good accountant. With my friends reference, I started...

Sateesh B

I have been using DNS Services over a year from setting up my company till date. They are extremely professional...

Satya Suresh

Software We Use

We use wide variety of softwares to manage your accounting and bookkeeping.

Contact Us

Head Office:
dns property tax services Pacific House, 382 Kenton Road, Harrow, Middlesex, HA3 8DP