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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 11124
Experience:  30 years as a practising solicitor.
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A sole trader is selling his hairdressing salon. He is a tenant

Customer Question

A sole trader is selling his hairdressing salon. He is a tenant and rents the business property. If the purchaser is willing to pay £20,000 for the business, and the fixed assets are valued at £8,000, is the difference of £12,000 purchased goodwill? And as he is a tenant, what are the implications of the lease in the sale? Thank you.
Submitted: 4 years ago.
Category: Law
Expert:  JGM replied 4 years ago.
Thank you for your question.

The difference would normally be goodwill, yes, unless a premium is being paid for the lease in which case the £12000 could be allocated to that. The accountant would advise on the best way to structure this for tax purposes.

As far as the lease is concerned, if the purchaser wishes to use the premises for the carrying on of the business, the lease would have to be transferred to from the outgoing tenant. The consent of the landlord would be needed.

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