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Where Taxpayers and Advisers Meet

CGT on business sale with earn out

andy4851
Posts:80
Joined:Wed Aug 06, 2008 3:40 pm
CGT on business sale with earn out

Postby andy4851 » Thu Jan 26, 2017 12:10 pm

Hi

Have a question as follows:

2 x 15% shareholders acquired the rest of a business for £450,000

Business later sold for £450,000
Legal costs borne by sellers - £110,000
Earn out on top potentially £500,000 following 3 year profit period

Tax return due for CGT

Am I correct in thinking the calc is

Purchase - £450k
Sale - £450k
Legals - £ 110k
Loss - £-110k

Earn out - £500k

Is the CGT payable on the £500k earn out minus the £110k loss? Or is the earn out kept separate?

All figures are collective and I have not split out the 50% share for each of the individuals.

Many thanks for any help given

Andy

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT on business sale with earn out

Postby bd6759 » Thu Jan 26, 2017 6:22 pm

The computation depends on if the "earn out" is ascertainable or not at the time of sale.

andy4851
Posts:80
Joined:Wed Aug 06, 2008 3:40 pm

Re: CGT on business sale with earn out

Postby andy4851 » Mon Jan 30, 2017 4:21 pm

Hi

Thanks, at time of sale earn out is definitely ascertainable.

Thanks again


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