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Beneficial incorporation: A case study

By Ken Moody CTA, January 2021

Ken Moody looks at a case study to illustrate that incorporating a business can be beneficial from a tax perspective in some cases.  

When considering the incorporation of a business it is worth weighing the ‘pros’ and ‘cons’ of each alternative in order to conclude which is the optimum route in the particular circumstances. Sometimes the result is surprising.  

There are two routes to incorporation of a business for capital gains tax (CGT) purposes: using ‘incorporation relief’ under TCGA 1992, s 162 or ‘gift relief’ under TCGA 1992, s 165. Relief may be restricted under either section where cash extraction is part of the strategy. The following case study involves a partial claim for gift relief on incorporation of a pharmacy business.  

The ‘gift

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