Capital Gains Tax exemption?
I read that if you give a business two years but find you are not suited to it and want to sell up then this is exempt from CGT. Is this true? UK answers only please
Answers:
I wonder if you're thinking of taper relief - on business assets used for a qualifying purpose (very specifically defined in the legislation!) for over two years you get 75% taper relief (ie only 25% of the gain is taxable). Then you have the annual exemption to set against the gain too (currently £8,800).
So, assuming all assets qualify for business asset taper relief you would have to make a gain of at least £35,200 (8,800/25%)before you will pay any tax on it.
Any additional gain over this amout would be taxable at 5 - 10% depending whether you are a higher rate taxpayer (ie taper to 25% of basic rate tax of 20% for CGT or 25% of 40% for a higher rate taxpayer).
So unless you've made a pretty substantial gain, ther may be no tax to pay. If you make a gain over £35,200 you have done pretty well so shouldn't feel too hard done by about handing a relatively small % over to the taxman. But I know that's easy for me to say when its not my money ;-)
Your question is too vague. If you have an accountant he/she should know the answer to this.
Sorry - not exempt.
If its an unincorporated business (sole trade) each individual asset would be taxable if its not already exempt. In practice, this means you'd pay tax on the premises, any large equipment (if sold at a gain) and the goodwill of the business.
If you reinvest the proceeds of the sale into the right type of qualifying assets you can defer the tax but it doesn't exempt the gain I'm afraid.
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Answers:
I wonder if you're thinking of taper relief - on business assets used for a qualifying purpose (very specifically defined in the legislation!) for over two years you get 75% taper relief (ie only 25% of the gain is taxable). Then you have the annual exemption to set against the gain too (currently £8,800).
So, assuming all assets qualify for business asset taper relief you would have to make a gain of at least £35,200 (8,800/25%)before you will pay any tax on it.
Any additional gain over this amout would be taxable at 5 - 10% depending whether you are a higher rate taxpayer (ie taper to 25% of basic rate tax of 20% for CGT or 25% of 40% for a higher rate taxpayer).
So unless you've made a pretty substantial gain, ther may be no tax to pay. If you make a gain over £35,200 you have done pretty well so shouldn't feel too hard done by about handing a relatively small % over to the taxman. But I know that's easy for me to say when its not my money ;-)
Your question is too vague. If you have an accountant he/she should know the answer to this.
Sorry - not exempt.
If its an unincorporated business (sole trade) each individual asset would be taxable if its not already exempt. In practice, this means you'd pay tax on the premises, any large equipment (if sold at a gain) and the goodwill of the business.
If you reinvest the proceeds of the sale into the right type of qualifying assets you can defer the tax but it doesn't exempt the gain I'm afraid.
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