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.
BOOK A CALL BACKOur customers say Excellent 
5 based on 800 reviews
Book a Free Consultation
Landlord tax specialist transfer/Purchase property through limited company
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
Step-1 – We sum up all the consideration, i.e. any cash received and the market value of shares
Step-2 – Computation of any Capital Gains on declarable assets such as goodwill and property
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.
Step-4 – Calculating the deemed cost of new shares:
Deemed cost of new shares = cost of shares – gain not rolled over (step 3)
- Tax saving advice to minimize the tax exposure of our clients and formulate the best tax agreements
- Creating an environment where our clients face minimal business incorporation relief issues
- Building trust in the market and helping clients with a streamlined process
We 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.
See how dns can help
You today.
Our team comprises Chartered Tax Advisers with many years’ experience in the industry, former property lawyers, accountants, and financial advisers. you can be assured that our advice comes with the best available seal of quality and expertise. Give us a call today on 020 3500 2646
to speak to our advisors, we'll find the right accounts & tax solution for you.
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.
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...
Read moreWe work with DNS Associates for 4 years now and we always had a feeling that our problems and questions are top...
Read moreDNS Associates provides cost effective and very professional services. My accountant Sneha Gurudutta has been...
Read moreVery professional and efficient team. I will highly recommended to all small or big business owners...
Read moreI’m a new client and Debangshu Sarkar has been reliable, timely and informative to date. Very impressed...
Read moreExcellent services, my account manager Amit Gupta always there for me, excellent work on time and take...
Read moreI recently starteed my own company and in need of a good accountant. With my friends reference, I started...
Read moreI have been using DNS Services over a year from setting up my company till date. They are extremely professional...
Read more
Software we use
We use wide variety of softwares to manage your accounting and bookkeeping.
Book a Free Consultation
Get in Touch
Consult our chartered tax advisor. Whether you’re a buy-to-let landlord, individual landlord, corporate landlord, property dealer, estate management, non resident investors, or a second home owner, we have packages and services to suit your every landlord and property need.
Head Office:
dns property tax services
Pacific House, 382 Kenton Road,
Harrow, Middlesex, HA3 8DP
Contact Number:
