HMRC has published technical and general guidance on the Disincorporation Relief introduced by the Finance Act 2013. The guidance covers eligibility, how to claim the relief, and its tax effect on claimants (companies and shareholders).

Disincorporation Relief was introduced from 1 April 2013 and is a form of roll-over or deferral relief. It allows 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.

The business transfer by the company will be a ‘qualifying transfer’ for the purposes of Disincorporation Relief if it meets all of the following conditions:

• the business must be transferred as a going concern;
• the business must be transferred together with all the assets of the business or together with all the assets of the business apart from cash;
• the total market value of the qualifying assets at the time of the transfer must not be more than £100,000;
• the shareholders that the business is transferred to must be individuals;
• those shareholders must have held shares in the company throughout the 12 month period before the transfer

Detailed guidance on Disincorporation Relief is available in the Capital Gains Manual.