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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5029
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am buying a business at an agreed value of £27000. I need

Resolved Question:

I am buying a business at an agreed value of £27000. I need to negotiate the apportionment of the good will and fixtures and fittings. What would you recommend the apportionment to be?
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Please advise if you are going to trade as LTD company or self employed sole trader?

Many thanks
Customer: replied 3 years ago.

I will be trading as a Ltd company

Expert:  taxadvisor.uk replied 3 years ago.
Thank you for your reply...

Tax relief for Goodwill is provided in two ways...
If you are trading as a sole trader (unincorporated business) then goodwill is taxed under CGT rules.

If you are a LTD company, you can wtite off goodwill over a period of 20 years and it is allowable as a tax deduction for corporation tax purposes.

Being a LTD company, it would really not matter much whether goodwill was £15k of £20k out of a total price of £27k. You have to make sure that your fixtures and fittings are not overstated on a practical note. My advice would be to have a split that is fair and equitable.

Both lots of capital expense would give you tax relief against trading profits.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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