For a multitude of possible reasons, shareholders or directors of a business may be considering to split their business up in the form of a demerger.

Whether the overall vision of the business has shifted, future direction of individual components has diverged, or there are other strategic or operational reasons, ‘demergers’ are a common business restructuring solution.

A demerger may appear a relatively simple process on the surface, however there are a number of tax implications to consider. With careful planning though, tax exposure in the form of income tax, capital gains tax or Stamp Duty Land Tax can be minimised.

The process itself can be executed in a number of ways, depending on circumstances and objectives, whilst safeguarding tax-efficiency. Commonly-termed options are a ‘statutory demerger’, a ‘capital reduction demerger’ or a ‘liquidation demerger’.

How we can help

We have considerable expertise in helping clients consider and implement the right business restructuring solution, whilst navigating the complex tax issues alongside.   To discuss further, feel free to get in touch with our Corporate Tax team on 01788 539000 or 0116 261 0061.


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