CGT U-Turn

[Iron Condor]

100K or 18K

Is the 100,000 relief a tax benefit of just 18K or is actually the full 100,000K off your tax bill?

BDO Stoy Hayward reckon its just 18K.

http://business.timesonline.co.uk/to...cle2781350.ece

If its only 18K, then its crap for something you can only claim once in your life.

[Pickle2]

But why would any sane person pay the £95k in the first place?

If they have the £95k in cash to give you, they could loan it to a new company of their own, and extract it in a more tax efficient manner in the future than they could the £100k they have just bought.

If you disagree, then I'm happy for you to buy my company at the same %age.

I dont think the other company would want to "extract" the 100k. They would start with 95k, and after buying your company they would have 100k. So would have a made 5k profit on the deal. Repeat ad infinitum.

[Crossroads]

But why would any sane person pay the £95k in the first place?

If they have the £95k in cash to give you, they could loan it to a new company of their own, and extract it in a more tax efficient manner in the future than they could the £100k they have just bought.

If you disagree, then I'm happy for you to buy my company at the same %age.

[Pickle2]

I don't think that quite works. Even taking it as a facetious remark, how would you extract the £95k without paying any tax on it?

The latest "u turn" doesn't help our kind of business at all, unless you van build it up to being a small consultancy rather than a one-person operation. It's designed to help people sell on their family owned shops etc. rather than to help contractors cream a bit more cash.

Well, you've just sold the business for 95k? So whats to extract? I dont see how its any different than if I had sold a consultancy for 95k. Just because the consultancy might of had 100k of goodwill instead of 100k of assest, makes no difference.

[TheFaQQer]

Not really. Its worth how much money is in he bank account. If your company has 100k in the bank as retained profit, i will buy it from you for 95k. Hows that?

I don't think that quite works. Even taking it as a facetious remark, how would you extract the £95k without paying any tax on it?

The latest "u turn" doesn't help our kind of business at all, unless you van build it up to being a small consultancy rather than a one-person operation. It's designed to help people sell on their family owned shops etc. rather than to help contractors cream a bit more cash.

[Pickle2]

You'd have to sell the business. Who would buy a personal service company without the person who provides the personal service? It'd be worthless.

Not really. Its worth how much money is in he bank account. If your company has 100k in the bank as retained profit, i will buy it from you for 95k. Hows that?

[Crossroads]

Just wondering how (if at all) the rummoured CGT "U-Turn" in the news at the moment might impact a contractor/Limited Co setup?

As I understand it, the proposal would be to allow the first £100,000 to be tax free upon the sale of a business when retiring. It would be a one off to avoid abuse.

If one were to say retire early (moving overseas permanently), could this be used as a vehicle to remove capital from a limited company more tax efficiently?

Thoughts?
Eamon

Obviously it will be a pale imitation of the tax breaks available pre-April.

Until it becomes legislation we won't know, but as a concept it has a few holes...

Define "retire" for starters...what happens if you "retire", get bored and decide to start working again?

The fact that you apparently have to "sell" rather than "wind up" means it's not as good as ESC C16 or MVL.

[VectraMan]

You'd have to sell the business. Who would buy a personal service company without the person who provides the personal service? It'd be worthless.

[RSoles]

More like a blatant case of the New Liebour blatant stealth tax methodology

'Hmm, we want to introduce a tax on [A]'. How do we do it?

I know, we cause a hell of a stink taxing [A], [B], [C] and [D] and [breathing]'

Wait a couple of days, then recant them all except [A].

'Win-win ...innit?'

RS

[DaveB]

I'd be more interested in seeing a u-turn on the S660 reprisals. A blatant case of a pram/toys tantrum if ever I saw one.

[Eamon]

Just wondering how (if at all) the rummoured CGT "U-Turn" in the news at the moment might impact a contractor/Limited Co setup?

As I understand it, the proposal would be to allow the first £100,000 to be tax free upon the sale of a business when retiring. It would be a one off to avoid abuse.

If one were to say retire early (moving overseas permanently), could this be used as a vehicle to remove capital from a limited company more tax efficiently?

Thoughts?
Eamon