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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I want to sell my 50% share of a business to my business partner

Resolved Question:

I want to sell my 50% share of a business to my business partner for £100000. What and how much tax will I have to pay on this figure, ie capital gains tax/PAYE ?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question...First of all, any disposal of an asset would attract capital gains tax and not income tax.CGT is payable on the gain made and not on sale proceeds. So you won't be taxed on £100,000 but on the gain made from sale of your share.There are certain conditions that have to be met if the gain was to attract Entrepreneurs' Relief. If these conditions are met then the gain would be chargeable to CGT at 10%. Otherwise, the gain would attract CGT at 18%, 28% or a combination of both depending on your taxable income including the gain made in the tax year of sale.More information on Entrepreneurs' Relief can be found herehttps://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-entrepreneurs-relief-2015 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.
Customer: replied 1 year ago.

quick question, could you briefly explain the difference between sale proceeds and gain, I thought the two would be the same as I had gained 100k through the sale ie the proceeds.

Customer: replied 1 year ago.

another question, if my personal taxable income was 15k would that be the 18% charge if I didn't qualify for the entrepreneurs 10% rate.

Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your replies ... my apologies for the delay in responding to you. Difference between sale proceeds and gainExample - Buy a house for £50k and you sell it for £75k. You make a profit of £25k.Sale proceeds are £75k and the gain is £25k.Your business (balance sheet) is reported on historic cost basis. Say the net assets/net worth of the business is £150k and your partner wishes to pay you £100k for 50% of it. In this scenario the gain would be (100-(150/2)) £25k. If your taxable income is £15k then (31,785-15,000) £16,785 would be taxed at 18% and the rest at 28% The threshold for CGT at higher rate is £31,785. I hope this is helpful and answers your question.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4793
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer.

Best wishes.

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