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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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Can a Sole Trader who is to start a new limited company

Resolved Question:

Can a Sole Trader who is to start a new limited company still take £10k Goodwill into the company (Credit £10k to Directors loan a/c) which would be under CGT annual allowance, so no CGT to pay.
I am aware there is no tax allowance now on the Goodwill in the company.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your question..

If the company is taking over a business as a going concern and it gives rise to a payment for goodwill to the sole trader, this would be chargeable to capital gains tax. Gains annual allowance against it is available.

The consideration would be treated as director's loan until such time it is paid in full.

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.

Expert:  taxadvisor.uk replied 1 year ago.

Hi there, just checking to see if you have any further questions or need any clarification.

Many thanks

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Expert:  taxadvisor.uk replied 1 year ago.

I thank you for accepting my answer.

Best wishes.