KPMG LLP, 1 Puddle Dock, London EC4V 3PD, UK Tel: +44 (0)20 7311 2626 Fax: +44 (0)20 7311 3224 Email: alison.hughes2@kpmg.co.uk

Received 8 August 2005.

Abstract

This paper gives an overview of the potential tax position for an academic participating in a university spin-out following the new legislation in the UK Finance Act 2005. The paper outlines a university spin-out transaction and explains the possible tax problems in this area since 2003. It then discusses the conditions that need to be met for an academic to potentially benefit from the new tax relief and some of the remaining issues. It concludes with some practical advice for structuring transactions.