Two changes were announced in the Autumn Statement to the treatment of goodwill on incorporation, which had immediate effect from 3 December 2014.

These were as follows:

  • Entrepreneurs’ Relief is no longer available on a sale of the goodwill to a connected party
  • Tax relief on writing off the goodwill (amortisation) can no longer be obtained once in the company.

Both of these changes will reduce the attractiveness of common planning which was undertaken when incorporating a business, but there are still options available to avoid tax becoming a drawback on incorporation.

The use of TCGA 1992, s.162 incorporation relief, in combination with s.165 gift relief where suitable, is still possible in order to avoid upfront capital gains on incorporation.

It should also be noted that the new restrictions only apply where the parties are connected, and there could therefore be situations where suitable planning could be undertaken to prevent the rules from applying.  Similarly, in cases of a management or third-party buy-out, these new restrictions should not apply.

With further tightening of the rules, it will be more important than ever to ensure suitable professional advice is sought before undertaking an incorporation as careful structuring will be needed to avoid unexpected outcomes.

Those who take part in the Olympic Torch relay can buy their Olympic Torch as a commemorative keepsake for £215 .
A number of Olympic Torches have been put up for sale on online auction websites, however torchbearers should be careful because where the sale proceeds are above £6,000 the sale will be a chargeable disposal for capital gains tax (CGT).
The amount of CGT will depend on whether the seller has already used their annual exemption (£10,600 for 2012/13) and the amount of their other income (18% rate of CGT for basic rate taxpayers and 28% for higher rate taxpayers).
Those planning to donate the proceeds to charity should be careful because the gain will still be chargeable to CGT although income tax relief may be available for the amount of the gift.