You may be able to delay paying Capital Gains Tax if you transfer your unincorporated business to a company in return for shares.

Incorporation Relief means you won’t pay any tax until you sell (or ‘dispose of’) the shares.

To qualify for Incorporation Relief, you must:

• be a sole trader or in a business partnership
• transfer the business and all its assets (except cash) in return for shares in the company.

You don’t have to claim Incorporation Relief – you’ll get it automatically if you’re eligible.

To work out the amount you need to pay Capital Gains Tax on, deduct the gain you made when selling your business from the market value of the shares you received.

It is not always advisable to claim this relief. If you are considering the incorporation of your business, you should take appropriate professional advice. Note that incorporation relief will be applied automatically so it is important to consider your
options prior to incorporation.

Source: New feed