Disincorporation relief provides shelter, but only from corporation tax, for goodwill and land and buildings leaving a company. The assets must leave as part of the transfer of a whole business as a going concern via a distribution to non-corporate shareholders.
It is important to note that there are potential income tax or capital gains tax charges on the shareholders on the distribution of the business, which needs to be managed.
When Might Disincorporation Relief be of Use?
- If the shareholders wish to separate trades to plan for a potential sale of one. One business could be left in the company and one distributed out
- To assist in the facilitation of a demerger of two or more businesses to allocate them in whole to shareholders
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