Selling my sole trader business to Ltd Co - tax implications

[andyps]

For the last few years I've been operating both as a sole trader and also running a limited company of which I am the majority shareholder. I've had a clear distinction between the two as the limited company has been VAT registered and as a sole trader I am not, using clear distinctions between categories of work across the two. Income for the sole trader elements has increased massively recently and is very close to the VAT limit so it makes sense to combine the two together under the limited company.

My question is, can I sell my sole trader business to the Limited company and treat it as a business sale to take advantage of the 10% CGT rate for selling a business? Obviously that would be better than corporation tax rates etc. so I would like to if it is allowed.

[andyps]

I will talk to my accountant about it, just thought I would gauge opinion on here first as there are many people better informed than I am!

I would be selling goodwill and some things which could be regarded as IP to the limited company, there are very few assets as it is a service business.

[andyps]

Thanks Eric, I thought it might not be as easy as it appeared! I'll chat to my accountant soon.

[andyps]

Alpinestars said:

Not just that, that's the company (purchaser) end of it. As a vendor, you cannot get ER for gains on goodwill in these circumstances.

OP, you can still roll the unincorporated business into the corporate, tax free. You'd be taking advantage of incorporation relief. Broadly, the corporate gives you shares in return for the business. A future sale of the shares might qualify for ER.

Thanks!