Goodwill on incorporation

Goodwill on incorporation

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Stupid question alert  - I'm not clear what I need to do next.

Small sole trade business incorporated on 15/04/13.

On 15/04/13;

Fixed assets & Prepayments £1,600

Liabilities     -  £3,000

Goodwill     £16,000  ( On GRF basis x 1)

Total consideration £14,600

I confusing myself with the liabilities.  Is it the £16k goodwill I need to pay CGT on or the net assets transferred?

Replies (6)

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By finegana
26th Jun 2014 22:10

Goodwill on incorporation

Hi

Nearly 150 views and no comments, Aweb often surprises me!

There are two ways upon incorporation, you appear to be taking the Credit Goodwill & pay CGT - which is uaually great, can your client apply ER?

The value that your client is benefiting from is the £16k, that's your own valuation I expect; less CGT allowance, CGT at 10% due to ER applying.

Watch my simplistic & non-technical, first, response be shot down now :-)

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By johngroganjga
26th Jun 2014 23:42

The CGT figure is the goodwill sale proceeds of £16,000. The £14 600 is irrelevant for tax purposes.

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By User deleted
27th Jun 2014 08:07

I wouldn't say the £14.6k is totally irrelevant

The part of it relating to fixed assets may be relevant for tax purposes.

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By johngroganjga
27th Jun 2014 08:29

Yes the sale proceeds of fixed assets will feature in capital allowances calculations. By "tax" i meant the CGT calculation the the question was about.

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By tonycourt
27th Jun 2014 10:13

And just to be picky

theoretically, but unlikely, the sale proceeds of the fixed assets could be subject to CGT too, i.e. to the extent that they exceed their acquisition value and are not covered by any other exemption (chattels). 

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By finegana
27th Jun 2014 18:09

Started something...
As predicted!
I love the intellectual posturing on here.
Cgt on £16k and maybe fixed assets, less annual allowance. ER may apply.
Capital allowance on fixed assets calcs too
Everyone good with that?
Have a great weekend

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