Taxable expense Question


J

John

For the past fifteen years my wife and myself have been
trading as a fancy goods business from a shop where we
still hold the freehold.

Now having reached retiring age we have sold the business
as a going concern and are leasing out the shop premises
to the couple who have bought the business from us.

My question is this, can we set the commission of £2497.50
which we paid to the Surveyors who sold the business for us
against tax as a deductable expense.

If so what is this classed as:
1. A trading expense to be set against our Partnership trading income.
2. A Land and Property expense to be set against the Leasehold income.

Also will we ahve to pay tax on the amount we sold the business for?

Thanks for any assistance - John






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P

Peter Saxton

For the past fifteen years my wife and myself have been
trading as a fancy goods business from a shop where we
still hold the freehold.

Now having reached retiring age we have sold the business
as a going concern and are leasing out the shop premises
to the couple who have bought the business from us.

My question is this, can we set the commission of £2497.50
which we paid to the Surveyors who sold the business for us
against tax as a deductable expense.

If so what is this classed as:
1. A trading expense to be set against our Partnership trading income.
2. A Land and Property expense to be set against the Leasehold income.

Also will we ahve to pay tax on the amount we sold the business for?

Thanks for any assistance - John
You would have to pay CGT on the sale of the business and the
surveyors fees would reduce the sales proceeds.
 
J

John

Peter Saxton said:
You would have to pay CGT on the sale of the business and the
surveyors fees would reduce the sales proceeds.
So it can only be set against CGT? and not Trading or Land & Property.

When we bought the business fifteen years ago we paid £20,000 for the
goodwill not including the cost of the freehold building and have now sold
it for £50,000, surely those fifteen years count for something and we each
have our CGT allowance to set against the profit. What sort of CGT
figure will we end up paying tax on? Thanks!



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P

Peter Saxton

So it can only be set against CGT? and not Trading or Land & Property.

When we bought the business fifteen years ago we paid £20,000 for the
goodwill not including the cost of the freehold building and have now sold
it for £50,000, surely those fifteen years count for something and we each
have our CGT allowance to set against the profit. What sort of CGT
figure will we end up paying tax on? Thanks!
There's indexation allowance up to 5 April 1998 and then taper relief.
If you make sure you set any other selling expenses against the
receipts and add any purchase expenses to the cost then you would
increase the cost by the indexation allowance. Take the adjusted cost
from the adjusted receipts and then you would pay CGT on 25% of the
gain. When you take into account your CGT allowances you won't have
any tax to pay.
 
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J

John

Peter Saxton said:
There's indexation allowance up to 5 April 1998 and then taper relief.
If you make sure you set any other selling expenses against the
receipts and add any purchase expenses to the cost then you would
increase the cost by the indexation allowance. Take the adjusted cost
from the adjusted receipts and then you would pay CGT on 25% of the
gain. When you take into account your CGT allowances you won't have
any tax to pay.
Thank you - much appreciated!

John



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