Goodwill on incorporation

Is/Can there be any?

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I have a client in the printing industry. Been trading as a sole trader for 4 years and looking to Incorporate. Profits have been increasing from £15k up to now £25k+. Is/Would there be any goodwill transferable to the Directors Loan Account so they can draw down on it tax free? Is there a simple way to calculate a goodwill valuation? Would there be a CGT implication for the Director?

I understand rules on goodwill have changed in the last few years - I assume this can still be ammortised in the accounts/allowable for tax releif?

Replies (10)

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By Martin B
02nd Jan 2019 13:10

I will leave it to others to comment on the calculation of goodwill as a specialist area
CGT implications is that the gain ( after the annual exemption) it will be taxed at 10/20% normal CGT rates with ER relief no longer available. In the process you will have created a credit on the directors’ loan account for future tax free drawdown.

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By Tax Dragon
02nd Jan 2019 13:16

As you have not posted anonymously, I won't say what I would have (but for my self-imposed ban on responding to Anonymous). You deserve better.

You might though do well to learn the current tax rules on goodwill. You can't assume the changes don't affect anything. Changes do, by nature.

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By Manchester_man
03rd Jan 2019 02:20

Indeed.
The assumption in your final sentence is incorrect.

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By Tax Dragon
03rd Jan 2019 06:45

Of course, for your case at hand, there might not be any goodwill anyway. Just because there's a profit, it doesn't follow that there's goodwill. And if there is goodwill, it might not be transferable.

That was your real question, presumably, but if you want intelligent comment on that, you need to give relevant information. You haven't even said what the business is.

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Replying to Tax Dragon:
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By su@1forall
10th Apr 2019 11:34

Wow! someone has come on here, for support and you behave like this - very professional - not!

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Replying to su@1forall:
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By Tax Dragon
10th Apr 2019 11:55

What you don't realise - what I hadn't realised until now - is that the question asked has been edited.

Had you seen the original question, you might not have got quite so far up yourself at my "behaviour". Which was what, incidentally?

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Replying to su@1forall:
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By banacc
10th Apr 2019 12:10

Wind your neck in Bramley.

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Replying to su@1forall:
RLI
By lionofludesch
10th Apr 2019 12:14

su-AT-1forall wrote:

Wow! someone has come on here, for support and you behave like this - very professional - not!

Where have you been for the last three months ?

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Replying to lionofludesch:
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By Tax Dragon
10th Apr 2019 12:22

Is that a comment on how I have behaved for the last three months?! :-)

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Replying to Tax Dragon:
RLI
By lionofludesch
10th Apr 2019 12:32

Tax Dragon wrote:

Is that a comment on how I have behaved for the last three months?! :-)

[chuckle]

No - a comment on this thread being reopened after three months.

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