Company disposal of a business

In this lesson

1. 0:00 Company disposal of a business overview
2. 0:24 Three disposal methods explained
3. 1:08 Sale of shares tax implications
4. 2:00 Sale of trade and assets treatment
5. 2:52 Hive down transfer mechanics
6. 3:38 Stamp duty and land tax considerations
7. 5:01 VAT implications across all methods
8. 6:03 Capital allowances and group relief effects
9. 7:34 Loss utilisation in each scenario
10. 10:04 Future share sale and exemptions

About this lesson

You'll discover why understanding these scenarios matters for your exam: each approach triggers different outcomes for capital gains, stamp duty, VAT, capital allowances, and loss relief. By working through the mechanics of each disposal type, you'll be equipped to handle disposal questions confidently, whether they appear in your case studies or objective tests. The lesson breaks down share disposals first, where a chargeable gain or capital loss arises on the shares themselves, with potential substantial shareholding exemption (SSE) and degrouping charges to watch for. For trade and asset sales, you'll see how each individual asset is treated differently—chargeable assets like property trigger capital gains, trading stock generates trading profit, and plant and machinery creates balancing adjustments under capital allowances rules. A hive down, by contrast, is a tax-neutral transfer of trade and assets to a new 75% group company, followed by a share sale; this approach preserves the clean company structure while leaving liabilities behind. The practical implications extend across stamp duty, VAT, and group relief. Share sales incur stamp duty at 0.5%, while trade and asset sales attract stamp duty land tax on land and buildings. VAT treatment differs significantly: share sales see the business continue unchanged with no VAT, whereas asset sales may trigger VAT unless it's a transfer of a going concern. Capital allowances and loss relief also vary dramatically—losses carry forward in share sales (subject to change of ownership rules), don't transfer in asset sales, but do transfer in hive downs. Understanding these three pathways will help you spot the right disposal method in exam scenarios and calculate the correct tax outcomes.

Duration: 11m