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Rollover relief on transfer of business

HMRC has changed its view on CGT rollover relief under section 162 of the Taxation of Chargeable Gains Act 1992 which applies when an individual member of a mixed partnership (a partnership with both individual and corporate members) transfers his interest (along with the business and its assets) in the partnership to a corporate member in exchange for shares in the corporate member.

Provided not all of the assets in the business are transferred then the transaction falls outside of section 162 and the CGT roll-over relief does not apply.

Before the change, section 162 roll-over relief was used on incorporation of mixed partnerships. Individual could (and still can until 30 April) get rollover relief on any gains subject to CGT on the exchange and pay CGT only on the disposal of shares in the corporate member.

The change of view applies to incorporations that take place on or after 30 April 2016. HMRC will amend its guidance in line with the changes.