Lee Sharpe looks at some of the finer points of CGT incorporation relief for property businesses.
Incorporation relief for capital gains tax (CGT) purposes is potentially available under TCGA 1992, s 162; broadly, the business owners transfer their interest in a qualifying business, in exchange for new shares issued by the company. On a qualifying transfer, the capital gain that would otherwise arise on the disposal of the chargeable assets is postponed (or ‘rolled over’) into the shares, pending their subsequent disposal, etc.
Where a business transfer qualifies, there is no need for a claim; the relief applies automatically (although it can be actively disclaimed under TCGA 1992, s 162A).
Generally speaking, most of the effort involved in making a successful claim has tended to orient around three key aspects:
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Does the activity qualify as a business?
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