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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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How much capital gains tax would I expect to pay after

Resolved Question:

How much capital gains tax would I expect to pay after selling my business for £300,000
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 10 months ago.

Is the business run as a sole trader, as a partnership or through a limited company? Did you start it from scratch or buy it as a going concern? What is the nature of the business?

Customer: replied 10 months ago.
Ltd company , started from scratch, healthcare
Customer: replied 10 months ago.
Two Directors, equal shareholding £1 share
Expert:  TonyTax replied 10 months ago.

Thanks.

Can you elaborate on "healthcare" please. Will the potential buyer be buying your shares in the company or the goodwill or the business? Do you or the company own any property from which the company trades?

Customer: replied 10 months ago.
Purchasers will buy shares/company, no property involved, lease offices. Domiciliary Care
Expert:  TonyTax replied 10 months ago.

Thanks.

Leave this with me while I draft my answer.

Customer: replied 10 months ago.
OK, thanks
Expert:  TonyTax replied 10 months ago.

You should refer to HS275 as part of this answer.

If you sell your shares in the company for £300,000, having stared the company from scratch, the shares will have cost you little so the gain will be about £300,000. The first £11,100 of the gain will be tax free due to the annual CGT exemption leaving you with a net taxable gain of £288,900.

Provided you qualify for entrepreneurs' relief, you will pay CGT at 10% on the whole of the net taxable gain. That would mean your CGT liability would be £28,890.00. If you don't qualify for ER, you will pay CGT partially at 10% and partially at 20% depending on the level of your income in the tax year that you sell the shares. Read the notes under the heading "Disposal of shares in or securities of your personal company" which detail how you qualify for ER.

I hope this helps but let me know if you have any further questions.

Customer: replied 10 months ago.
We will be paid in staged payments, £180,000 on signing contract, £60,000 after one year, and another £60,000 after 2:years. Does this make any different, do we stage pay tax then too ???
Expert:  TonyTax replied 10 months ago.

Is the £300,000 figure set in stone and is being paid in instalments simply because the buyer cannot afford to pay it in one lump sum or is any part of the payment contingent on hitting profit targets for example?

Customer: replied 10 months ago.
Purely cash flow, doesn't have £300,000 , might present cash flow problems if they were to pay all at once.
Expert:  TonyTax replied 10 months ago.

Thanks.

The gain will all be taxable in the year that you sell the shares as its not contingent on a future event. However, you can apply to pay the CGT in instalments as you will read here. If it turns out that not all the instalments of the sale price are paid, you can have the CGT liability re-assessed.

Customer: replied 10 months ago.
Ok, thanks for help, must be bedtime now
Expert:  TonyTax replied 10 months ago.

Thanks.

Would you mind rating my answer before you leave the site please.

Customer: replied 10 months ago.
Okay
Expert:  TonyTax replied 10 months ago.

Thanks.

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