Tax considerations when a sole trader takes on a partner.
My client trades as the sole proprietor of a small building firm. For some years he has been expecting to retire. The client has tangible business assets valued at about £200 000 of which £50 000 is subject to hire purchase agreements.
Instead of retiring completely from his business activities on 1 April 2016 he decided to bring his son into the business and they formed a partnership sharing profits equally. Previously his son had been involved in a similar trade related to the construction industry but on a smaller scale. The client’s son has not put any money into the business.
Several questions occur to me.
- If it is argued that my client has in effect given half of the business to his son could I claim gift relief for capital gains tax purposes?
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