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Incorporating sole trader to LTD. Taxes involved

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Happy holidays

Where can I find a good read to cover the following specailly the treating of goodwill in newly created company and any tax benefits;

Incorporating Sole trader business to limited company. sole shareholder/director. - no plans to sell the company in near future - only soure of income.

Sole trader business market value about £50,000 (eBay store with 500k turnover) - No other assets only stock

Options to consider: trasnfer the business and get incorporation relief or transfer goodwill/credit with Director loan account and pay 10% CGT on self assement

Do the compamy get any tax relief/capital allowances on say 5 years of amortisation i.e 10k per annum? expected profits before taxes are about 40K

Regards

Research done sofar:

https://www.accaglobal.com/ie/en/technical-activities/technical-resource... (outdated about amortisatoin bit)

https://www.gov.uk/guidance/corporation-tax-relief-on-goodwill-and-relev...

https://www.taxadvisermagazine.com/article/end-goodwill-trick

 

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Replying to williams lester accountants:
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By nameistaken
28th Dec 2021 17:33

williams lester accountants wrote:

These are a good read - https://www.lexisnexis.co.uk/store/products/tolleys-tax-annuals-premium-....


Thanks for the link but thats one expensive read just to get understading of issue in question.

Do you have any experience with such situation?
regards

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Replying to nameistaken:
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By David Ex
28th Dec 2021 19:24

nameistaken wrote:

Thanks for the link but thats one expensive read just to get understading of issue in question.

Can’t comment on cost or quality of the Tolley works but, unfortunately, it’s not possible to be a credible tax adviser without reference to paid reference works, in my opinion.

It’s not “just to get understading of issue in question”; it’s to enable you to give best advice to your client (and avoid exposing yourself and your PI provider to risk from giving duff advice). You can spend valuable (chargeable) time trawling the internet for free content, which may or may not help, or you can go straight to up to date and reliable technical resources which you’ve paid for.

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By Paul Crowley
28th Dec 2021 20:10

There are lots of reasons for going limited, but if profit exceeds £50,000 then tax rate will increase fairly soon. CT at 26.5% on the margin with tax on dividends increasing.

10% now to get a substantial tax free credit is superb but assuming client is still basic rate for the gain.
No BADR for sole trader who continues in the business

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