BPR and changes to the business structure

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

This guidance note considers how changes to the business structure affect the BPR position of the assets concerned. It considers changes arising from incorporation, the formation of a partnerhsip, reconstruction, liquidation, winding up and otherwise ceasing to trade.

Incorporation

Sole traders, partnerships or LLPs may choose to incorporate their business and to trade instead as a limited company. This may be for tax, liability or other reasons. See the Incorporation - introduction and procedure guidance note for further details about the tax effects of incorporation.

There are different ways to incorporate and different tax effects follow from each. This note focusses on the BPR consequences of incorporation. The potential loss of the relief should be considered when choosing a method of incorporation.

Incorporation for shares

An incorporation for shares means that all of the assets and liabilities of the business are exchanged for shares in the new company. Any gains

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