Disincorporation relief for small companies

A recent review focussed on ways to simplify the tax returns and reporting system for companies with fewer than ten employees and turnover below £750,000. Ideas included aligning the tax computation rules with those for unincorporated businesses, and reducing the number of adjustments to statutory accounts required for tax purposes.

One major difference concerns private benefits: companies report benefits in kind via the complex and unwieldy P11D system while unincorporated businesses rely on adjustments to profit.

Many small businesses would be better off if they could be converted from company to unincorporated form. While tax reliefs are available when an unincorporated business incorporates, tax costs may arise on "disincorporation". We would welcome reliefs for the "disincorporation" of businesses currently carried on by companies.