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CGT and allowable costs when selling

What is a deductible cost for CGT when selling a business?

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So a contact is selling his business, a limited company, asset disposal relief etc will apply and assume he meets those criteria. He started the business some years back and purchased a freehold property from which to run his practice, which is owned by the Ltd Co and sits on the balance sheet at £0.5m.

If he sold for £2m, would it be correct that you first deduct qualifying costs, (question - would this normally include the original cost of the property where trade occurs) and then take the £1m slice of asset disposal relief, thus leaving him with £0.5m of gains chargeable to normal CGT rates etc?

Does the property qualify as a deductible cost and whats the order of set off. Thansk for any pointers

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By David Ex
06th Oct 2021 11:37

chappie wrote:

So a contact is selling his business,

When you say “contact”, do you mean a client of yours? If not, I definitely wouldn’t get involved in offering tax advice - and certainly not based on an anonymous Internet forum.

With those amounts, tailored professional advice is the only sensible solution.

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By DKB-Sheffield
06th Oct 2021 11:56

I'm with David Ex, if you're not an accountant, your 'contact' needs an accountant.

FWIW. On the limited information provided, your 'contact' seems to be considering a share sale. The carrying value of assets purchased by, and owned by, the company will likely have little (probably no) impact on the personal CGT (and BADR) of your 'contact'.

Clearly, there are many other factors that need to be considered from a personal/ corporate tax aspect... as well as taking significant legal advice. None of which can be provided through here!

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Psycho
By Wilson Philips
06th Oct 2021 11:58

What is being sold? Trade and assets of a business, or shares in a trading company?

In any event, the best advice appears to have already been given - in the first response.

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paddle steamer
By DJKL
06th Oct 2021 12:05

Seems to be company that owns the property. If company selling property it needs to consider indexation to December 2017, BADR will only come into play if company thereafter is formally wound up or sold (re the company shares. )

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paddle steamer
By DJKL
06th Oct 2021 12:49

If shares being sold it is the cost of the shares that needs considered, what the company spent funds on is mainly irrelevant.

Assume whole of property owned by company used for the trade, none of it let out and that company shares will qualify for BADR? (no tainting assets/activities?)

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