CG65700 - Reliefs: Incorporation relief: introduction
Introduction
Interaction with other reliefs
Who can claim section 162 relief
Introduction
The content in this manual covers a much higher level of detail compared to say a Helpsheet supporting the Self Assessment Tax Return. If you are looking for an introduction to the main rules for the relief for a particular year, please see the Incorporation Relief (Self Assessment helpsheet HS276) on GOV.UK and select the year you are considering.
All statutory references in this page are to the Taxation of Chargeable Gains Act 1992 unless otherwise specified.
Relief under section 162 applies where a person other than a company transfers a business as a going concern with the whole of its assets (or the whole of its assets other than cash) to a company wholly or partly in exchange for shares issued by the company to the person making the transfer. Provided that these various conditions are satisfied, see CG65710, and provided that for disposals from 6 April 2026 a satisfactory claim is made, see CG65735, the charge to CGT on the whole or part of the gains will be postponed until such time as the person transferring the business disposes of the shares.
The way the relief works in practice is that all or part of the gains arising on the disposals of the assets are ‘rolled over’ by reducing the acquisition cost of the shares received.
Relief under section 162 is commonly referred to as ‘incorporation relief’.
For transfers taking place on or after 6 April 2026 a claim is required. For details of what such a claim should include and timeframes for making a claim, see CG65735.
Transfers of businesses occurring prior to 6 April 2026 did not require the making of a claim, the relief was automatic where the conditions were met. However, for these transfers prior to 6 April 2026 the person transferring the business could make an election under section 162A to prevent relief under section 162 from applying, see CG65730. Section 162A elections are no longer available for transfers occurring on or after 6 April 2026.
Interaction with other reliefs
The interaction of the various reliefs available on the disposal of business assets is explained at CG60201.
Who can claim section 162 relief
Relief under section 162 is available where a person who is not a company transfers a business to a company in exchange for shares.
`Company’ is defined for CGT purposes in section 288 as including “any body corporate or unincorporated association but does not include a partnership”. Relief is therefore not available where an unincorporated association transfers its business to a company.
By virtue of section 99 this definition also extends to unit trust schemes, see CG57680P, with the rights of the unit holders being treated in the same way as shares in a company.
Individuals
Relief is available to individuals who meet the conditions set out in section 162.
Partnerships and LLPs
Relief is available to individuals who are partners/members (even if one or more of the other partners is a company) where the whole of a partnership/LLP business is transferred to a company as a going concern.
The relief is computed separately for each partner/member.
Relief is not precluded where one or more of the other partners/members receive cash or a combination of shares and `other consideration’, see CG65720.
Relief is not available where a partnership or LLP incorporates into an existing corporate member. This is because the corporate partner/member already owns a share of the business assets, so the whole assets of the business will not have been transferred.
Companies
Relief under section 162 is not available to companies but section 140 provides a similar relief for companies on the transfer of a trade carried on outside the United Kingdom to a non-resident company, see CG45660 onwards.