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Where Taxpayers and Advisers Meet

CGT calculations on business partnership sale

Robbi
Posts:9
Joined:Sun Nov 03, 2019 6:48 pm
CGT calculations on business partnership sale

Postby Robbi » Mon Nov 18, 2019 6:53 pm

We are selling the business partnership which is home based, with no bricks and mortar. Just the name, goodwill, staff and clients. Can anyone confirm i have done the calculations in the correctly and in the right order.

Sale of business £29,950.00
less entrepreneurs relief £24,000.00 ie 2 partners at 12000 each.
10% CGT £595.00
Nett of Tax £29355.00
Less broker fee £4800.00
Less Solicitors fee £2000.00

Total tax & fees payable £7395.00

Amount due to partners after taxes and fees is £22,555.00

We have never sold a business before and wanted to make sure we have covered everything , thank you very much in advance. :D

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: CGT calculations on business partnership sale

Postby darthblingbling » Mon Nov 18, 2019 7:21 pm

Do you have any other gains to declare? You should both also get an annual exempt allowance of around £12k.

After the legal and broker fees, if allowable expenses, I'd consider very little is left liable to CGT. Depending on what other income you have ER may not need to be considered.

jerome.lane
Posts:237
Joined:Mon Aug 12, 2019 8:41 am
Location:Sandhurst, Berkshire
Contact:

Re: CGT calculations on business partnership sale

Postby jerome.lane » Tue Nov 19, 2019 11:32 am

I think you mean:

Sale of business £29,950.00
less CGT ANNUAL EXEMPTIONS £24,000.00 ie 2 partners at 12000 each.
10% CGT £595.00 ASSUMING QUALIFIES FOR ENTREPRENEURS RELIEF
Nett of Tax £29355.00
Less broker fee £4800.00
Less Solicitors fee £2000.00

Total tax & fees payable £7395.00

Amount due to partners after taxes and fees is £22,555.00

It appears correct if both partners stand equally. With partnerships, I would have thought that you would either be dealing with new and exiting partners rules (where the UTR stays the same) or selling the trade and assets rather than the partnership. It would be unusual for a buyer to want to inherit the history of an unincorporated business.

You'd also have to look at things like any computer equipment etc to make sure there's no balancing charges and consider any overlap relief for income tax purposes. Depending on the year end and history, the timing of the sale could improve the tax position. I assume the low value means they're not VAT registered so you don't have to worry about TOGC etc.
Jerome Lane
Tax Adviser
Telephone: 07943 005902


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