Entrepreneurs relief and tax relief on goodwill no longer allowed on incorporation.
By Richard Morrell, Dec 6 2014 12:02PM
In the autumn statement the chancellor announced that from 3rd December 2014 individuals will no longer be entitled to claim entrepreneurs relief on the gain arising on the sale of goodwill to a connected company. Also, no tax relief will be allowed on the amortisation of the goodwill for the company acquiring the goodwill.
The generation of goodwill on incorporation and being able to claim entrepreneurs relief (and pay tax at 10% on the gain) and claim corporation tax relief on the amortisation of the goodwill is a common method of restructuring a business to mitigate tax liabilities.
This is often one of the main reasons that businesses decide to incorporate, so if you are thinking of incorporating you may need to think again!