Incorporating my company

Incorporating my company

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Hi

I'm thinking of incorporating my company and placing a value of goodwill in the accounts.

If I elect to have the gain on goodwill covered by Incorporation Relief then will I pay tax regardless in the future? For example if I value goodwill at £40k and then my business fails in five years would I still have to pay Capital Gains Tax when my business folds or is it wiped off as my business will then be worth nil?

Silly question I'm sure but hopefully someone can be of help and provide any other guidance that might be felt appropriate.

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By gbuckell
26th Jul 2012 18:38

No

If you claim incorporation relief under s162, i.e the business is transferred in exchange for shares, the base cost of the shares will be minimal. If the company later folds there should be no CGT charge but no loss relief to speak of either.

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