Demerger route finder

You answer six questions about what you want to separate, who will own each part, whether a sale is planned, your reserves, property and borrowing. The tool scores the three main demerger routes against your answers using the conditions each route has to meet, then ranks them with the reasons, the HMRC clearances usually needed and the points to watch.

No. It gives an indication based on a few facts, to help you understand the options and start a conversation. The right route depends on the full facts, including the group's history, the shareholders' circumstances and any plans for the future. A short call with us is usually enough to confirm the route.

The statutory demerger rules in Part 23 of the Corporation Tax Act 2010 only apply where the companies are trading companies or members of trading groups. Holding property as an investment isn't a trade, so separating a property portfolio from a trading business usually needs a capital reduction or liquidation demerger instead.

Several demerger reliefs depend on the transaction being for genuine commercial reasons and not part of arrangements for someone else to take control. A statutory demerger can't be used where there are arrangements for a third party to acquire control, and other routes need careful handling if a sale is already in view. Timing and evidence of the commercial reasons both matter.

Distributable reserves are, broadly, a company's accumulated realised profits less its realised losses. A statutory demerger is a distribution in company law, so the company needs enough distributable reserves to cover it. A capital reduction demerger works differently: reducing share capital creates the reserve needed, which is one reason it's so widely used.

Most facility agreements restrict reorganisations, disposals and distributions without the lender's consent, so the bank usually needs to agree. For a capital reduction, the directors must also sign a solvency statement confirming the company can pay its debts. In a liquidation demerger, creditors must be paid or agree to the arrangements.

A partition is a demerger where different shareholders end up owning different businesses, for example two families going their separate ways. It's usually done through a capital reduction or liquidation demerger. The tax reliefs have additional conditions for partitions, and independent valuations are normally needed so each side receives fair value.

Yes. When you finish, the page address contains your answers, so you can copy the link to share it with your accountant or co-shareholders, or print or save the result as a PDF. Nothing you enter is stored or sent to us unless you choose to contact us.

The tool lists the clearances usually sought for each route. For capital reduction and liquidation demergers, these are typically section 138 and section 139(5) TCGA 1992 and section 701 ITA 2007. For a statutory demerger, they're usually sections 1091 and 1092 CTA 2010. They can normally be requested in a single application to HMRC.

Many groups don't fit neatly into a questionnaire, for example where there are several layers of companies, overseas shareholders or trusts. Choose the closest answers for an indication, then talk to us. We respond the same working day and can usually tell you on a first call which routes are realistic.