Stamp Duty on Business Goodwill?

[PinkPanther]

Getting conflicting information from several parties (including solicitors) and wondered if anyone here can shed a light.

Convenience store and house up for say £300k. £250k is the property/F&F value and £50k is business goodwill (which is inherent to the property/location)

Is SDLT chargeable on the full £300k (and therefore @ 3%) rather than just 1% on the £250k property value? The following links I've sourced suggest SDLT is due on full purchase price of £300k but I have been informed by a solicitor that it is due on property value alone.

Anyone know the full story?

www.tltsolicitors.com/legal-update/Commercial-Update/2006/P6518.asp
www.taxationweb.co.uk/forum/discuss.php?id=15318

Edited by PinkPanther on Tuesday 13th February 17:28

[Piglet]

I haven't read the links and its not my area of law...however my understanding is that SDLT is not chargeable on genuine "goodwill". The stamp office are though getting tighter on investigating whether the goodwill is genuine or just a device to avoid SDLT.

I would suggest you just ring the SDLT helpline and ask them, they are (usually!) quite helpful.

[Eric Mc]

That would be my take on it too. As Piglet said, the difficult part is deciding the split between the "Goodwill" element and the "Land and Property" element.

[GreenV8S]

PinkPanther said:

£50k is business goodwill (which is inherent to the property/location)

I'm not a lawyer, but that doesn't sound like business goodwill. If your house is handy for a school it increases the value. If your shop is well positioned, that increases the value in the same way. I'd have thought that business goodwill would cover a benefit that the buyer will get as a result of your past business there - established customer base, known trading name with a positive reputation etc.

[Piglet]

That's a good point Greeny and might well explain the conflicting advice.

[srebbe64]

GreenV8S said:

PinkPanther said:

£50k is business goodwill (which is inherent to the property/location)

I'm not a lawyer, but that doesn't sound like business goodwill. If your house is handy for a school it increases the value. If your shop is well positioned, that increases the value in the same way. I'd have thought that business goodwill would cover a benefit that the buyer will get as a result of your past business there - established customer base, known trading name with a positive reputation etc.

Goodwill is the value of the deal minus the net asset value of the company. As such, if an identical empty property is worth £50k less, then I'd have thought it's reasonable to claim that the £50k is goodwill.

[2 sMoKiN bArReLs]

srebbe64 said:

GreenV8S said:

PinkPanther said:

£50k is business goodwill (which is inherent to the property/location)

I'm not a lawyer, but that doesn't sound like business goodwill. If your house is handy for a school it increases the value. If your shop is well positioned, that increases the value in the same way. I'd have thought that business goodwill would cover a benefit that the buyer will get as a result of your past business there - established customer base, known trading name with a positive reputation etc.

Goodwill is the value of the deal minus the net asset value of the company. As such, if an identical empty property is worth £50k less, then I'd have thought it's reasonable to claim that the £50k is goodwill.

but it can't be identical & in the same location

[srebbe64]

2 sMoKiN bArReLs said:

srebbe64 said:

GreenV8S said:

PinkPanther said:

£50k is business goodwill (which is inherent to the property/location)

I'm not a lawyer, but that doesn't sound like business goodwill. If your house is handy for a school it increases the value. If your shop is well positioned, that increases the value in the same way. I'd have thought that business goodwill would cover a benefit that the buyer will get as a result of your past business there - established customer base, known trading name with a positive reputation etc.

Goodwill is the value of the deal minus the net asset value of the company. As such, if an identical empty property is worth £50k less, then I'd have thought it's reasonable to claim that the £50k is goodwill.

but it can't be identical & in the same location

This much is true!