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Sophia has decided to sell the unincorporated business to an unconnected third party for £200000 to be received in cash on 1 may 2015. the only chargeable asset of sophia’s business in goodwill, the value of this asset has increased over a number of years to £150000. The goodwill has a nil cost.
what is the chargeable gain on goodwill
Answer : 150000-0 = 150000why didnt they take £200000 which was actually the selling price.
The business will be made up of many assets but only one in that example is a CHARGEABLE ASSET for CGT purposes upon which a gain will arise!
There is no chargeable asset called “the business”!! You have to look at each individual asset and determine whether any gain would arise – yes if dealing with goodwill or a business property but no for assets such as inventory or receivables
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