How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask taxadvisor.uk Your Own Question
taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4995
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

I started a small software company 10 years ago just me getting all the work, but my wife

Customer Question

I started a small software company 10 years ago just me getting all the work, but my wife as book keeper and shareholder (50/50) and we hired in extra programmers when needed. 3 years ago I formed an LLP with some of the sub contractors,(who had never been staff) and the business is going well. At the end of the 2nd year (Dec 2014) I personally retired from the LLP as a stakeholder, and signed over all my old customer good will to the LLP. For this I have been paid 36K. But my accountants tell me I have to pay full tax on this money as it was "income" add this to my wage for last year and I'm left with a 16K tax bill!
Does this sound right or should I be able to claim Entrepreneurs' Relief on the 36K for my good will payment?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question.Disposal of goodwill is chargeable to CGT and not income tax.Your worst scenario is CGT on (36,000-11,000) 25,000 at 28% i.e. £7,000You may be able to claim entrepreneurs relief on the capital gain on sale of your business provided you meet all conditions set out here (if you qualify then the CGT rate is 10%https://www.gov.uk/entrepreneurs-relief/eligibility 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.Please only rate my answer if it is acceptable.