Taxation of Chargeable Gains Act 1992 section 162A

Election for section 162 not to apply

Section 162A allows a person who transfers a business to a company to elect out of the automatic roll-over relief that would otherwise apply under section 162, so that the capital gain on the transfer is brought into charge immediately.

• When a business is transferred to a company in exchange for shares, roll-over relief under section 162 applies automatically, but the transferor can elect to disapply it so that the gain is crystallised at the point of transfer.
• The election must be submitted to HMRC by a deadline that is generally two years after the 31 January following the tax year of the transfer, but this is shortened to one year after that 31 January if all the shares received have been disposed of by the end of the tax year following the transfer.
• Transfers of the new shares between spouses or civil partners are ignored when determining whether the shorter deadline applies, but any onward disposal by the spouse or civil partner (other than back to the original transferor) counts as a disposal by the transferor for this purpose.
• Where the business was owned by more than one person (including a partnership), each owner can independently elect in respect of their own share of the gain and their own share of the new shares received.