Buying a business

brushman_2

Hi, does anyone know if you are buying a business and paying for assets and goodwill, when you do your accounts at the end of the financial year can you get your tax liability reduced because of the money you paid for goodwill and assets (or perhaps only one of these) and which one do you get more tax relief for?

Thanks!

clear_blu

My accountant claimed 25% depreciation on fixed assets each year. He never claimed for goodwill..........this makes sense as you still have that as an asset in the business and I dont think the tax man would allow relief on that depreciating.
Just to make the point thats FIXED ASSETS e.g. desks, computers and equipment necessary for running the business not stock (that which you sell)

WHA

You claim capital allowances on fixtures & fittings, plant and vehicles at fixed rates as per HMRC rules, totally unrelated to the life of those assets.

You can't claim capital allowances or any other relief on property, land & buildings (although in a few cases you may be able to claim industrial buildings allowance if it is something like a factory).

If you are a limited company you CAN claim capital allowances on purchased goodwill but you CAN'T claim this if you are a sole trader or partnership.

Hope that helps.

clear_blu

Hi WHA as I was only ever a sole trader I never came across capital allowances being allowed for GOODWILL. How does that work in a limited company........What percentage is allowable.........Does the value of GOODWILL depreciate with time.
By the way.......love the signature.....:rotfl: