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I sold my business for £65000 with the consideration split

Resolved Question:

I sold my business for £65000 with the consideration split as follows; goodwill £63499,
fixtures and fittings £1000 and the LEASE £ 1 . I was a sole trader running a taxi businessThe business was sold on 20th Nov 2011.
How much CGT I will have to pay
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi
Thanks for your question = I am Sam and I am one of the Uk tax experts here on Just Answer.
Only the fixtures and fittings would fall out of the capital gain pool as these should have been claimed initially through the annual accounts so subject to capital allowances/annual investment allowances, so you will need to work out whether any value outstanding and establish any further capital allowance or balancing charge due.
Then for capital gains the lease the goodwill and the business is subject to capital gains - but less any purchase value on the lease and the business itself (unless this includes the value of any vehicles (which again would affect the annual accounts)
Do if you wish any working out of capital gains, please advise
1) The costs to obtain the business and lease (legal etc)
2) The value to purchase this business IF it was an existing trade
3) The costs to sell the business (legal etc)
4) Your annual income for that year (2011/2012)
5) Whether you went to to purchase a further business
I can then give you a rough estimate of what capital gain you should have paid, however this far on, I assume HMRC are asking after this position, may I ask what you declared and what HMRC state is liable
Thanks
Sam
Customer: replied 1 year ago.

Thank you for your answer.

The sost to opbtain was only £500 because the assets and goodwill were bought from a company in liquidation. The buying business was transform cars, already in existence. The lease is in my personal name, and on renewal i think i may have incurred about £1000 in legal fee and surveyors fee to renogiate the lease and rental.

On selling the Business i think i paid about 2200 legal fee.My annual profit for that year shoud be around 10,000. or even less. Although thisis an estimated figure as yet as the accounts are not finalised.

I was abroad for 3 years and thats why the delay.I will not be purchasing another business.

Expert:  Sam replied 1 year ago.
Hi
Thanks for your response
You advise that the goodwill was charged at £63499 - how did that equate to £10,000 profit?
What do you mean by transform cars? You advise this was a taxi business? Please expand?
Rental and lease - for premises ? Did you own the freehold of the premises, or someone else - what proportion of the 1.1 million was freehold, what amount was leasehold and what amount was rents?
Did you not have an accountant at the time - has this sale not yet been declared to HMRC? Do you have outstanding sole trader self assessment tax returns too?
This seems far more complex than you originally indicated.
Thanks
Sam
Customer: replied 1 year ago.

This is not complex at all.The business called transform cars was sold for £65000. the consideration was split as goodwill £63499 Assets £1000 and The lease £1.

The £10,000 is an estimated profit. The premises were rented and the lease was in my name,

As i said I was abroad for 3 years I returned about 6 months ago. I am now in touch with the revenue and trying to complete my tax return myself for 2012/2013.

Pleasew calculate the cgt and let me know.

Expert:  Sam replied 1 year ago.
Hi
Thanks for your response
This will relate to 2011/2012 as already stated so has no bearing in the 2012/2013 self assessment tax return
Then you have a gain of £63500 for 2011/2012 from which the first £10600 is exempt as this is the annual exemption allowance and this leaves £52900 liable to capital gains tax.
As your annual income was only £10,000 for the year - then first £35000 is liable to 18% tax and the reminder of the gain at 28%
So £32475 x 18%= £5845.50
Remaining £20425 x 28% = £5719
So total gain £11564.50 plus penalties and interest for late declaration and payment.
Thanks
Sam
Customer: replied 1 year ago.

Hi Sam

Thank you very much. Do i not get entreprenuers Relief, because I was trading as a sole proprietor, and if I do i understand the tax rate will be 10%. Please confirm

Expert:  Sam replied 1 year ago.
Hi
Thanks for your furtehr question
No you do not qualify for ER relief - as you are not selling any tangible assets. And you are not a limited company selling shares in the company (I would have taken this into account if this were the case as I did ask what the sale price was made up of)
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13779
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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