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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15995
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have sold my small business for £68,000, by the time I

Customer Question

I have sold my small business for £68,000, by the time I have paid off all business debts I will be left with about £20000. It is tea room , they have just bought the lease and the assets and goodwill , but not the limited company which traded as the tea room. I owned 75% of the shares. Will I have to pay tax on this??
Submitted: 7 days ago.
Category: Tax
Expert:  TonyTax replied 7 days 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 7 days ago.

Did you or the company own the lease, the assets and the goodwill?

Customer: replied 7 days ago.
The company owned them all.
Expert:  TonyTax replied 7 days ago.

Thanks.

Leave this with me while I draft my answer.

Expert:  TonyTax replied 7 days ago.

The company almost certainly won't have made a profit on the disposal of the lease and assets but may have made a gain on the disposal of the goodwill.

You need to split the disposal proceeds between the three components. To arrive at the gain on the goodwill, you need to deduct what you paid for it originally which will have been nothing if you set the company up from scratch. The gain will be taxed at the corporation tax rate of 19%. If you have written off the cost of the goodwill against company profits then you wll have a 100% goodwill gain.

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