Tag Archives: CGT

Don’t forget goodwill!

The valuation of assets can be important for tax purposes. For example, a valuation may determine the amount of inheritance tax (IHT) payable on a lifetime transfer (e.g. the transfer of an investment property to a discretionary trust), or on an individual’s death estate. In addition, an asset valuation may be needed to determine the… Read More »

PPR relief: A ‘residence’ or a quick profit?

The principal private residence (PPR) relief rules for capital gains tax purposes require a dwelling to have been a ‘residence’ of the individual to whom the gain accrues (TCGA 1992, s 222(1)). What is a ‘residence’? The term ‘residence’ is not defined in the PPR relief legislation. However, case law indicates that the requirement for… Read More »

Show me goodwill!

A business generally comprises various assets, one of which is often goodwill. However, a new business will not normally have goodwill; the goodwill of a business is broadly the advantage of the reputation and connection with customers that the business possesses. A new business will not normally have a ‘name’ or reputation as such. Goodwill… Read More »

Shortcut to business asset disposal relief?

Business asset disposal relief (BADR; previously known as entrepreneurs’ relief (ER)) is a valuable and much sought-after capital gains tax relief. However, the conditions for claiming the relief are often problematic. Jumping hurdles For an individual shareholder disposing of shares in a company, the most common condition for relief is that throughout a two-year period… Read More »

Incorporating a buy-to-let property LLP into a company

A limited liability partnership (LLP) is treated like an ‘ordinary’ partnership in many respects. However, an important distinction arises where a business incorporates into a company. Separate legal entities Like a company, an LLP is a separate legal entity. When (for example) a business carried on by an ordinary partnership of individuals is incorporated into… Read More »

Selling your company? How dare you!

A targeted anti-avoidance rule (TAAR) was introduced (from 6 April 2016) to prevent ‘phoenixism’. In broad terms, this practice involves company owners winding up their ‘old’ companies and extracting profit reserves as capital (instead of income) and repeating the exercise in one or more successive businesses. The effect of the TAAR applying is that an… Read More »

Sale of goodwill: income or capital?

It is common in many occupations and professions (e.g. law, medicine) for individuals to be engaged as self-employed consultants. Some consultants will build up their own practices before eventually selling them. From a tax perspective, the question arises how the practice disposal proceeds should be treated. For example, is it an income or capital receipt?… Read More »