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I would like some advice on is on Capital Gains Tax, more…

I would like some advice...
I would like some advice on is on Capital Gains Tax, more specifically, the 10% Entrepreneurs’ Relief option. In May 2015, I sold part of my business, which was a website. The total sale value was $29,750, which at the time equaled £19,070.I note this from HMRC:"Disposal of the whole or part of your businessYou must have owned the business directly or it must have been owned by a partnership in which you were a member.
Entrepreneurs’ Relief is not available on the disposal of assets of a continuing business unless they’re comprised in a disposal of a distinct part of the business."I continued my business, but took it in a completely different direction (eCommerce). Previously, I had developed a website which was a monthly subscription service, and this is the part of the business I had sold. I would classify that as a distinct part of the business.Would I qualify for the 10% Entrepreneurs’ Relief? I'm under the impression that I would, however, I would like to fully clarify this.Could you also confirm that the Capital Gains Allowance of £11,100 would mean that the total taxable gain would be £7,970, meaning 10% tax on this would be £797?
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Answered in 19 minutes by:
1/17/2018
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,353
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi, Sam here, one of the UK Tax Experts here on Just Answer, Thank you for your question - I shall reply shortly.

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Customer reply replied 7 months ago
ok, thank you

Hi

Thanks for your patience

Could you advsie whether you were a sole trader or limited company

What assets did you actually sell ? As the website is not as such as tangible asset so could you advsie what the websites purpose was that made it worth something to someone else

Thanks

Sam

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Customer reply replied 7 months ago
A limited company. The website was a membership site where users paid monthly for the services provided. This produced a recurring revenue stream. The website had low monthly costs to host & maintain, so would produce about $1000 - $1500 / month profit. It was valued based on this monthly revenue.
Customer reply replied 7 months ago
Also, in total, I paid about $7000 to have the website developed

Hi

Then no you do not qualify for entrepreneurs relief as this a limited company (only shares sold might qualify) - and the gain is taxed at your usual corporation tax rate and not capital gains (so probably 19%)

Thanks

Sam

Sam
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Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Customer reply replied 7 months ago
ok, thank you for your advice

HI

You are welcome and I am sorry the news is not more favourable

Thanks

Sam

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Customer reply replied 7 months ago
Sam, would it make a difference at all that I paid for the website personally, and the company didn't?
Customer reply replied 7 months ago
I developed it prior to setting up the company
Customer reply replied 7 months ago
the company received the revenue from the website

Hi

Possibly although have you declared that income earned from the website as a sole trader ? And why did you sell it from the limited company?

Thanks

Sam

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Customer reply replied 7 months ago
I declared the revenue via my limited company, which received it. The website wasn't sold from the limited company, I was sold from me personally to the new owner (I received the final sale value into my personal bank account). I thought that as this was not a company asset, it should not go through the company, however, I made a gain from the sale, which I would like to include in my self assessment to ensure the correct taxes are paid.

Hi

then you have put yourself is a very messy situation which will be costly to unravel and you would need to pay additional taxes to declare the right income from this website through a sole trader self assessment first which would see you with interest and penalties and owed National Insurance - and then correct the corporation tax return and companies house return and accounts and any mispaid salary as a director to be able to go forward on tho=is dicretion with the sale of the website

Thanks

Sam

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