Incorporating a Property Rental Business

 CGT, Property Tax  Comments Off on Incorporating a Property Rental Business
Nov 122016

The following article was written in July 2013. Since that time, the Government has introduced various changes to the tax legislation, in order to discourage private landlords operating in the buy to let sector. These changes include higher SDLT rates on acquiring a “second home” restrictions on tax relief for borrowings and higher CGT rates on residential property.

This has led to increasing interest amongst individual landlords in the question whether it is worth incorporating. Although companies are also subject to the higher SDLT rates, they are not affected by the interest relief restrictions, and they are taxed at lower rates, both on rental profits and capital gains.

There is a special CGT relief for incorporating a business. In the context of buy to let incorporations, it is crucial that the properties are held as business assets rather than as an investment – and the two are not necessarily the same thing.

(This article can be downloaded in pdf format at

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Budget 2015 Entrepreneurs’ Relief – New Rules on Joint Ventures and Partnerships

 CGT, Corporate Tax  Comments Off on Budget 2015 Entrepreneurs’ Relief – New Rules on Joint Ventures and Partnerships
Mar 302015

This year’s Budget has not been very kind to entrepreneurs’ relief, the 10% tax rate that applies when an individual sells a business. We’ve already seen in last year’s Autumn Statement, the introduction of rules to restrict the relief when a business incorporates. This year’s Budget saw two more measures aimed at people intending to access the relief when they shouldn’t be.

In this article we shall look at the new rule on joint ventures and partnerships. What was the law before the Budget, what is the law now, and why was the law changed? Continue reading »

Entrepreneurs’ Relief and Goodwill – what did the Autumn Statement say?

 CGT, Corporate Tax, IP Tax  Comments Off on Entrepreneurs’ Relief and Goodwill – what did the Autumn Statement say?
Jan 252015

Updated July 2015

This article was updated just days before the Summer Budget which took place on 8 July 2015. It is now the case that a company acquiring a business will no longer be able to claim tax relief on goodwill being amortised in the accounts. This is irrespective of whether the business was acquired from a related party. 

In this article we are going to take a closer look at the new rules which seek to restrict tax relief for goodwill when a business is sold. These restrictions were announced in the recent Autumn Statement,  and have since become law, being incorporated into the first Finance Act of 2015. The new rules  are aimed at individuals or partnerships who decide to incorporate their business. What is striking is that the new rules go further than the mischief that they are intended to counteract. Continue reading »

Incorporating Goodwill – Can you claim tax relief when you become a company?

 Corporate Tax, IP Tax  Comments Off on Incorporating Goodwill – Can you claim tax relief when you become a company?
May 052013

One of the key tax issues when a sole trader or partnership incorporates an existing business is the treatment of goodwill. In particular, can the new company claim tax relief for writing down the goodwill after acquiring the business?

This should be possible for those who started business recently – by which we mean, those businesses set up from 1 April 2002 onwards. But if your business is more established, then we have a problem…

UPDATE From 3 December 2014 it is no longer possible to claim tax relief for internally generated goodwill in line with the accounts when incorporating a business. This is due to the announcement in the Autumn Statement of 2014 restricting deductions for goodwill when a close company acquires a business from an individual or partnership, and the company is related to the seller(s). 

However, the following article is still relevant to the question of when a person becomes entitled to shares in a company that are to be issued to him under a contract.

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Budget 2013 – New Limits on Income Tax Reliefs

 Budget 2013, Income Tax  Comments Off on Budget 2013 – New Limits on Income Tax Reliefs
Apr 102013

Budget 2013 has produced a few nasty restrictions on income tax reliefs, which cannot be said to be business friendly at all. In a nutshell, certain types of tax deduction will be capped at 25% of an individual’s annual income, or £50,000, whichever is the greater number.

The Draft Guidance sets out a list of the reliefs affected, and examples of how to do the sums. Perhaps the most significant impact will be felt by individuals setting up their own business, whether as a sole trader or in partnership. Continue reading »