Answers · UK 2025/26

What is disincorporation relief in the UK?

Disincorporation relief was a temporary corporation tax relief (2013-2018) that allowed small companies to transfer qualifying business assets to a sole trader or partnership without triggering an immediate tax charge on the company. It applied to goodwill and qualifying land transferred at market value without SDLT or stamp duty charges. The relief expired on 31 March 2018 and has not been renewed.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

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Disincorporation relief was introduced by Finance Act 2013 (Sections 58A-58I Corporation Tax Act 2010) and was available for transfers on or after 1 April 2013 and before 1 April 2018. It was designed to remove a barrier to disincorporation (converting a limited company back to a sole trader or partnership) for small businesses. Under normal rules, when a company transfers assets to its shareholders, the company is treated as disposing of them at market value for corporation tax purposes, triggering a gain. The shareholders also face a distribution or capital gain charge. Disincorporation relief removed the corporation tax charge on the company for goodwill and qualifying land used in the trade, with the asset transferred to the shareholders at the company's book value rather than market value. Conditions: total market value of qualifying assets transferred must not exceed £100,000; the company must be a small company (applying EU SME criteria -- under 50 employees and either under £10m turnover or £10m balance sheet total); the business must continue to be carried on by the transferee (individual or partnership) after the transfer; the company must be dissolved within 2 years of the transfer. Current position: the relief expired on 31 March 2018 and was not extended. The Office of Tax Simplification (OTS) recommended renewal but this was not taken forward. Since 2018, businesses considering disincorporation must use the normal rules, potentially using entrepreneurs' relief (now Business Asset Disposal Relief at 18% post-October 2024) on the distribution and careful planning on the company side. Specialist tax advice is essential for any disincorporation now. HMRC guidance: CTM36905.