Hi All
I have sole trader client who had existing goodwill of 100k, this business was incorporated,with goodwill valued at 200k.
My question is, will the base cost of goodwill be 100k(200-100) and would cgt be payable on the 100k?
Many thanks
Replies (2)
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Depends how you have incorporated and if the goodwill is capable of being transferred.
If the goodwill has been 'sold' and can be transferred then yes, subject to annual exemption.
Are you asking from the perspective of the previous sole trade, prior to incorporation?
If so, then yes, if the sole trade paid £100k for the goodwill and sold it to the new company at its market value of 200k, there would be a profit on disposal of £100k.