Demerger of a £6million Property Investment Company

Welcome to our ASWATAX blog, where we examine real-world case studies to showcase the intricacies and solutions within the domain of tax advisory. Today, we present a recent success story involving the demerger of a property investment company valued at £6 million, jointly owned by two brothers undergoing a separation in business interests.


The Challenge

The scenario presented a substantial challenge: how to effectively divide the assets between the brothers and their respective families without incurring substantial tax liabilities. Without expert guidance, the default route of selling assets to separate limited companies would have resulted in significant Capital Gains Tax implications, alongside complexities in Corporation Tax and Stamp Duty Land Tax (SDLT).


Our Approach

Recognising the complexities involved, we conducted a thorough analysis to craft a practical roadmap for the demerger process. Integral to our strategy was securing advance clearance from HM Revenue & Customs (HMRC) to ensure tax neutrality. Collaboration with VAT specialists and legal partners was integral, addressing VAT implications and legal complexities.


Key Considerations

Beyond immediate tax implications, our advisory extended to anticipating future inheritance tax implications for both brothers and their families. Valuations, relief applications, and attention to detail were crucial, resulting in a comprehensive 40-page advisory report.


The Outcome

Through careful planning and strategic manoeuvring, each brother and their respective family now own 100% of individual companies, enabling them to pursue personalised strategies seamlessly. Notably, the achieved outcome was virtually tax-free, with Stamp Duty Land Tax reduced to a nominal 0.5%, a significant improvement from initial projections.


The successful demerger underscores the importance of expert tax advisory in navigating complex corporate restructures.



Please note that while this case study highlights a successful outcome, such transactions entail considerable complexities and individual circumstances may vary. We recommend seeking professional advice tailored to your specific situation.


At ASWATAX, we are committed to delivering practical solutions that optimise tax efficiency while mitigating risks.