Q&A: stamp duty and capital reduction demerger

In our regular Q&A series, Croner Taxwise tax advisor Tom Butt considers the rules around stamp duty compliance when looking to organise a capital reduction demerger of a limited company

The two shareholders of a limited company client would like to go their separate ways and split the business. The group is not considered a trading group and there are insufficient distributable reserves at present to distribute a portion of the business. Both shareholders are keen to avoid a liquidation. Therefore, we are considering undertaking a capital reduction demerger, but are aware of changes to stamp duty relief by Finance Act 2020. Please could you explain the impact of these changes?

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