Sole Traders lose Goodwill Tax Relief

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Since 6th April 2008 and until 3rd December 2014 Sole Traders and Parternships were able to claim Entrepreneurs Tax Relief on Goodwill when becoming a Limited Company.

Until the 3rd December 2014 they would claim there Capital Gains Allowance

Period Tax-free allowance
5 April 2013 to 6 April 2014 £10,900
5 April 2014 to 6 April 2015 £11,000

Then claim ER which reduced the rate of tax to 10% on the gain.

But from the 3rd December they will now pay Capital Gains at the normal rates of CGT which are 18% or 28% (for Higher Rate Income Tax Payers).

They also lose the Corporation Tax Relief see Section 849C CTA2009

Also see this blog..

The tax benefits of goodwill on incorporation?

steve@bicknells.net

 

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