Welcome to our September Newsletter!
As we move through September, there are several important tax developments and reminders for businesses and individuals to keep in mind.
This month’s newsletter looks at the opportunity to recover VAT on certain pre-registration costs, as well as an important change to the way Incorporation Relief must now beclaimed.
We also look at when Stamp Duty Land Tax may apply to property transactions and highlight the recently announced date for the next UK Budget. Our Tax Diary provides a useful reminder of the key filing and payment deadlines for September and October.
Alongside our technical updates, our Corporate Finance Team share a detailed update on The challenge of finding a buyer who shares the owner’s vision, UK acquisition: a smart way to grow” and how long does it take to sell a business? We share key insight following a collaboration excersie with Blaser Mills Law.
Recovering VAT on pre-registration costs
Businesses that register for VAT may be able to reclaim VAT paid on certain goods and services purchased before VAT registration.
There are specific time limits for claiming pre-registration VAT. VAT on goods can generally be reclaimed where the goods are still held by the business or have been used to produce other goods that are still held by the business.
The claim must relate to goods purchased within 4 years before the date of registration.
VAT on services can usually be reclaimed where the services were purchased within 6 months before registration. In both cases, the costs must relate to the business that is now registered for VAT and be attributable to its taxable activities.
Pre-registration VAT should be included on the business’s first VATreturn. Businesses should ensure they hold valid VAT invoices and records to support the claim, including details of how any business and privateuse has been calculated.
There are special rules for certain situations, including partially exempt businesses, businesses with non-business income and significant capital assets covered by the Capital Goods Scheme. These rules can affect the amount of VAT that can be recovered.
It is therefore important for businesses to check the pre-registration rules carefully to ensure that all eligible VAT is identified and claimed correctly.
Incorporation Relief may reduce your CGT bill
When a sole trader or the partners in a partnership transfer a business to a limited company, Capital Gains Tax (CGT) may arise.
This is because business assets are normally treated as being transferred at their market value, which may be considerably more than their original cost.
However, Incorporation Relief can allow some or all of the resulting gain to be deferred.
Broadly, the relief may be available where a business is transferred to a company as a going concern, together with all its assets, other than cash if desired, and the consideration received is wholly or partly in shares in the company.
Where the conditions are met, the gain eligible for relief is deducted from the CGT base cost of the shares received. This means that CGT is generally postponed until the shares are eventually sold or otherwise disposed of. If cash or other consideration is received alongside shares, the relief is normally restricted to the proportion of the transfer represented by shares. Part of the gain may therefore become immediately chargeable to CGT.
Incorporation Relief must now be claimed
An important change applies to businesses transferred to companies on or after 6 April 2026. Previously, Incorporation Relief applied automatically where the necessary conditions were satisfied. For transfers from 6 April 2026, the relief must instead be claimed.
The claim will normally be made through the Self-Assessment tax return for the tax year in which the transfer takes place.
The claim must be made on or before the first anniversary of 31 January following the tax year in which the business transfer took place. For example, for a transfer during the 2026/27 tax year, the claim deadline will normally be 31 January 2029.
Failing to make a valid claim could therefore result in CGT becoming payable on gains arising when the business is transferred to the company.
Incorporation Relief is not necessarily the best option in every case. Before incorporating a business, it is worth considering the immediate CGT consequences, whether other reliefs may be available and the potential tax position when the company shares are eventually sold.
Professional advice should therefore be obtained before completing a business incorporation, particularly where the business has significant goodwill, property or other assets that have increased substantially in value.
When do you pay Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a tax that may apply when you buy land or property in England or Northern Ireland. It is important to check whether SDLT applies before completing a purchase, as the tax can represent a significant additional cost.
SDLT can apply when you buy a freehold property, a new or existing leasehold property, a property through a shared ownership scheme, or when land or property is transferred in exchange for payment. The amount of SDLT due depends on factors including the type of property, the purchase price and whether any reliefs or exemptions apply.
For residential property purchases in England and Northern Ireland, SDLT is charged on a banded basis, meaning different portions of the purchase price are taxed at different rates. The current rates for a standard residential property purchase are:
- 0% on the first £125,000
- 2% on the portion from £125,001 to £250,000
- 5% on the portion from £250,001 to £925,000
- 10% on the portion from £925,001 to £1.5 million
- 12% on the portion above £1.5 million
Different rules apply for certain buyers. First-time buyers may qualify for relief, while those purchasing an additional residential property will usually pay an additional 5% on top of the standard rates. Non-UK residents may also be subject to different rates.
SDLT only applies to property and land transactions in England and Northern Ireland. Scotland has a separate tax called Land and Buildings Transaction Tax (LBTT), while Wales has Land Transaction Tax (LTT).
An SDLT return normally needs to be submitted to HMRC and any tax due paid within 14 days of a property purchase completion. Your solicitor or conveyancer will usually deal with this as part of the purchase process.
Budget Date Announced
The new Chancellor of the Exchequer, John Healey has confirmed, in a video message, that the next UK Budget will take place on Wednesday, 28 October 2026.
Details of all the Budget announcements will be made on a special section of the GOV.UK website which will be updated following completion of the Chancellor’s first Budget speech in October.
HM Treasury is inviting written representations for the Autumn Budget 2025 from individuals, interest groups, MPs and organisations. Submissions should propose evidence-based policy ideas or comment on existing policies, with clear rationale, costs, benefits and deliverability.
The deadline for submissions was 23:59 on Wednesday, 9 September 2026.
The Budget will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR).
This forecast will be in addition to that published for the Spring Statement and fulfil the obligation for the OBR to produce at least two forecasts in a financial year, as is required by legislation.
The OBR has executive responsibility for producing the official UK economic and fiscal forecasts, evaluating the government’s performance against its fiscal targets, assessing the sustainability of and risks to the public finances and scrutinising government tax and welfare spending.
The MGroup Corporate Finance
The challenge of finding a buyer who shares the owner’s vision
Looking beyond the purchase price and assessing a buyer’s values, experience and long-term vision can help ensure your client’s business continues to thrive long after they’ve stepped away.
Click HERE for the full article
UK acquisition: a smart way to grow
Building a business organically takes time, but buying an existing business can be one of the most effective ways to accelerate growth and create long-term value. However, acquisitions require careful planning, commercial awareness and the right professional support to ensure the transaction is structured effectively and risks are properly managed.
Click HERE for the full article
How long does it take to sell a business?
One of the most common misconceptions is that a sale can happen quickly once a buyer is found. A structured process typically takes anywhere from 6 to 12 months, and in some cases longer. Understanding the timetable in advance helps business owners plan properly, maintain momentum, and maximise value. Find out more in our latest insight article.
Click HERE for the full article
Inside todays M&A market: Trend, deal challenges and practical advice
In conversation with Geoff Pinder, Partner at The MGroup Corporate Finance & Edward Lee, Partner at law firm Blaser Mills.
Click HERE for the full article
The new M&A playbook for UK Compliance Business: A UK focused case study
We explore how regulation, recurring revenues and market consolidation are driving M&A activity across UK compliance businesses.