Illustration - sale of business

In this lesson

1. 0:00 Sale of business illustration and setup
2. 1:39 Incorporation relief and partial deferral
3. 2:13 Calculating gains with incorporation relief
4. 3:00 Applying incorporation relief to each asset
5. 4:10 Taxing the deferred gains at applicable rates
6. 5:23 Disapplication election and alternative strategy
7. 6:32 Additional tax considerations and compliance

About this lesson

The video works through a realistic scenario where Gabriella sells her florist business to Sparkle Limited, exploring both the automatic position with incorporation relief and the potential benefits of disapplying it. You'll see how partial incorporation relief applies when consideration is split between shares and cash, how business asset disposal relief and goodwill rules interact, and why the future availability of relief matters when calculating the optimal tax position. The worked example demonstrates the step-by-step calculation of chargeable gains, the application of annual exemption, and CGT liability at the appropriate rates. Crucially, you'll understand why Gabriella should consider disapplying incorporation relief given that she won't work for the company post-sale—a planning decision that affects both her immediate tax bill and her base cost in the shares for future disposal. The video also covers the wider tax considerations: income tax on cessation, VAT deregistration and transfer of a going concern rules, and stamp duty exemptions on share issuance. This is essential Strategic Business Reporting and Advanced Taxation material, directly relevant to exam scenarios involving business disposals and incorporation relief planning.

Duration: 8m