Business Asset Disposal Relief

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Hi,

I haven't been able to find a clear answer to this question. I even asked my professional body and it isn't any clearer.

 

If a partnership is dissolved and incorporated into a limited company can the transfer of the assets from partnership to limited company qualify for business asset disposal relief? 
 

Incorporation relief will be claimed for some but not all of the partnership assets. 
 

Thank you! 

Replies (10)

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By Ruddles
15th Feb 2024 12:53

How do you intend to claim incorporation relief for only some of the assets? Or do you mean that the new company is making a payment as well as issuing shares?

What assets are you looking to claim Relief on?

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Replying to Ruddles:
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By ES accountancy
15th Feb 2024 15:10

Ruddles wrote:

How do you intend to claim incorporation relief for only some of the assets? Or do you mean that the new company is making a payment as well as issuing shares?

What assets are you looking to claim Relief on?

£125,000 of assets. £25,000 of shares in new company. Incorporation relief on £25,000 taken as shares. £100,000 chargeable to CGT. Can that £100,000 be claimed as business asset disposal relief?

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Replying to ES accountancy:
By Ruddles
15th Feb 2024 15:48

You haven't answered my second (third) question

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Replying to Ruddles:
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By ES accountancy
15th Feb 2024 16:05

Ruddles wrote:

You haven't answered my second (third) question

Sorry the asset is £125,000 worth of agricultural land and buildings.

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Replying to ES accountancy:
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By Tax Dragon
15th Feb 2024 19:49

Buildings plural? What are they made out of, lego? And these are the entirety of the assets and support a partnership?

It's hard to give a credible tax analysis when the facts seem so... incredible.

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Replying to Tax Dragon:
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By ES accountancy
16th Feb 2024 10:17

Well yes. They have multiple fields and multiple barns/stables but no residential properties. Farm minus the farm house.

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By Cylhia66
16th Feb 2024 06:47

Is it possible to be more cryptic?

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Replying to Cylhia66:
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By ES accountancy
16th Feb 2024 10:15

Am I? That wasn’t intentional

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By JCresswellTax
16th Feb 2024 10:49

Surely there can't be a claim for incorporation relief AND BADR?

Goes against the thought that you are claiming BADR as the business has ceased or been sold?

Only a gut feeling but doesn't seem right.

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By taxdigital
16th Feb 2024 11:44

If your query is where the transfer qualifies for incorporation relief, BADR can also be claimed, the answer is yes, subject of course to meeting all the eligibility conditions. Each individual partner will need to work out their tax liability though. As incorporation relief is automatic (meaning no claim is needed) if you find the relief isn't worth it you might want to elect to disapply the relief. It will be difficult for anyone to go in all the details as to the next steps though.

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