ALM13500 - Mergers, acquisitions and joint ventures: example 5

De-mergers

Company A creates 2 new companies, Company B, and Company C, in July 2020. Company B has no control over Company C, but Company A controls both Company B and Company C. For the purposes of the levy, none of the companies are considered connected for the remainder of the tax year 2020 to 2021. In the same tax year Company A sells some of its shares in Company B, and then has no control over Company B. At the start of the next tax year, B receives its own levy allowance of £15,000 as it has no connection to either company at the point of April 2021. Company A and Company C are considered connected and share one £15,000 allowance for the tax year 2021 to 2022.