New disincorporation relief guidance

HMRC have published technical and general guidance on Disincorporation Relief - including eligibility, how to claim the relief, and its tax effect on claimants (companies and shareholders) say Harris & Co chartered accountants Northampton who specialise in accountancy services to small and medium sized businesses.

Disincorporation Relief was introduced from 1 April 2013 and is a form of roll-over or deferral relief allowing a company to transfer certain assets to shareholders who continue the business in an unincorporated form, without the company incurring a Corporation Tax charge on the disposal of that asset. It is available when a “qualifying transfer” is made between 1 April 2013 and 31 March 2018 by a company to some or all of its shareholders.

The guidance defines what constitutes a “qualifying transfer”, how the relief works as well as the claim procedure and requisite information for a claim. As claims are made jointly by the company and shareholders, a claim cannot be made if the company has already been struck off or wound up.

Once a claim to relief is made it cannot be revoked. The transfer values apply to transferor and transferee. Transferee shareholders must use the same transfer value in future Capital Gains Tax calculations.

More details are available from HMRC.