05: Incorporation of a business

Incorporation – transferring a business to a limited company – may involve a disposal of your business assets to the company. For CGT purposes the gain is calculated as if you had sold the assets at their market value, whether or not you receive any cash for them.

There are two reliefs that will normally enable you to avoid CGT on the transfer: rollover relief on incorporation and relief for gifts of business assets. They have different qualifying conditions and different effects on future tax liabilities so you should take advice before going ahead.

When you transfer land and buildings to a limited company, stamp duty land tax (SDLT) is payable on the market value. If your business has property worth more than £150,000 the only way of avoiding SDLT is to retain the property in your personal ownership.