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Incorporation Relief

AMS_AccountantsAMS_Accountants Hull, East YorkshireRegistered Posts: 31
Hi

I have been asked a question about this and I have never had a client who started a business as a sole trader and then converted to a limited company.

The person wants to sell his assets to the limited company for shares and cash. As stated, he is a sole trader but wants his wife to be a 50% shareholder in the limited company. As CGT allowance for 2016/17 is £11,100, he wants to use his wife's allowance as well to sell to the limited company for £22,200 in cash and the rest in shares.

Am I right in thinking that he cannot use his wife's allowance because he owns the assets? He operates as a sole trader and not in partnership with his wife.

Thanks
Carl Derving FMAAT | Managing Director
AMS Accountants
www.ams4u.co.uk | 01482 257752

Comments

  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    Yes correct. Also need to be careful about the values being equiv. to the annual exempt amount too.
    no tax relief on the writiing down of the goodwill either.
    Regards,

    Burg
  • TreadStoneTreadStone Feels At Home AAT Licensed Accountant Posts: 280
    Agree with Burg. It's him that's incorporating so excludes the wife.
  • justlearning12justlearning12 Registered Posts: 4
    Hi,

    Just out of interest, how does the process of 'the rest in shares' work?

    Thanks
  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    He is buying the issued share capital I.e. 100 shares of £1 each
    Regards,

    Burg
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