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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am in the processing of selling my motor factors business.

Resolved Question:

I am in the processing of selling my motor factors business. I started the business from scratch 22 years ago.
i am selling at £275K.
i know that i have annual allowance of £11,100 to be taken off this along with alowable expenses such as solicitors fee's.
there after £32,000 is taxed at 10% and the balance at £20 %.
my question is
would my value of stock get taken into account here - I.e would my stock valuation come off this £275k
current stock valuation is circa £150k.
also - if my stock value as an asset on my balance sheet is increased - would this have an inpact on my personal tax payable?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. As you are going out of the business altogether then Entrepreneurs' Relief (ER) will almost certainly apply which will tax your capital gain on disposal at a flat rate of 10%. You have a lifetime limit on ER of 10 million so I suspect that your breaching this limit is unlikely! The normal Capital Gains Tax (CGT) rate is 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of disposal. Thus ER is of inestimable value. Presumably your stock is being sold with the business in which case the whole kit and caboodle with be rolled into one to calculate your gain. In calculating the gain you should offset your setting up costs if you still have them. Not much, I appreciate, but as the TESCO advert says, 'Every little helps!' I do hope that you have found my reply of assistance. .
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Customer: replied 1 year ago.
Keith, Many thanks - so basically after the (ER) has been taken off and any allowable expenses - the gain is taxed at a flat rate of 10%.
and the only off set would be my original setting up costs being deductable? and no matter what my stock valuation this would not come into play? Thanks for your assistance.
Expert:  bigduckontax replied 1 year ago.
No not quite. Once you have sold up you will have a sum paid to you including your trading stock. The gain can then be computed remembering selling costs and the setting up costs if you still have that data can be deducted. CGT then apples to the net gain less your 11.1K Annual Exempt Amount (AEA) at the ER of 10% which will be better than a poke in the eye with the proverbial sharp stick. Thank you for your support.