Ӱ

Transferring goodwill on incorporation

Produced by Tolley in association with
Owner-Managed Businesses
Guidance

Transferring goodwill on incorporation

Produced by Tolley in association with
Owner-Managed Businesses
Guidance
imgtext

One of the assets transferred on incorporation is the business goodwill, which can then be used to create a loan account which can be drawn tax-free. There are specific tax treatments in respect of any goodwill transferred both for the person transferring it to the company and for the company acquiring it on incorporation, these are set out below. However, it is first necessary to consider the valuation of the goodwill.

Valuation of and recognition of goodwill

It is essential that a careful approach is taken to the valuation and recognition of goodwill, as this is liable to be challenged by HMRC. In order to be transferred to the company, the goodwill must, in HMRC’s view, be free, ie not personal goodwill which remains with the individual running the business, and not attaching in some way to the property. If it does attach to the property, a higher property valuation should apply for which there is no corporation tax relief, though business asset disposal relief (previously known as entrepreneurs’ relief) will be available on the higher

Continue reading
To read the full Guidance note, register for a free trial of Tolley+™
Julie Butler
Julie Butler

Managing Partner at Butler & Co Chartered Accountants & Registered Auditors 


Julie Butler FCA is the managing partner of Butler & Co Chartered Accountants, a firm that specialises in agricultural and land matters. Julie has lectured extensively on proactive tax planning for farmers and landowners, with an emphasis on diversification and development. Julie's articles are published in the national accountancy and tax press and she is the author of the successful books Tax Planning for Farm and Land Diversification and Equine Tax Planning as well as being co-author of Stanley: Taxation of Farmers and Landowners with Malcolm Gunn.

Powered by

Popular Articles

Transfer of assets to beneficiaries ― legal, administration and tax issues

Transfer of assets to beneficiaries ― legal, administration and tax issuesThis guidance note outlines how assets are transferred to beneficiaries and the tax consequences that flow from the transfer. Whether a payment is income or capital is discussed in the Payments to trust beneficiaries guidance

14 Jul 2020 13:52 | Produced by Tolley Read more Read more

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more Read more

Payroll record keeping

Payroll record keepingUnder SI 2003/2682, reg 97, “...an employer must keep, for not less than 3 years after the end of the tax year to which they relate, all PAYE records which are not required to be sent to [HMRC]...”. Reasons for keeping the records include:•being able to calculate tax and

14 Jul 2020 12:52 | Produced by Tolley in association with Ian Holloway Read more Read more