Readers’ forum: Net present value discounting applicability to business sale

Business valuation

My client has just sold his business. He will receive £2m up front at completion on 30 June 2022 and then a further £500 000 on each of the next three anniversaries of the completion being £3.5m in total.

I understand that the entire amount of £3.5m will need to be self-assessed in the tax year 2022-23. However with inflation now at possibly 9% can my client use net present value discounting to calculate the ‘real value’ of the future consideration which will be less than £3.5m?

I look forward to hearing from readers.

Query 19 935 – Inflated.

Whole amount of the £3.5m needs to be brought into account.

On the assumption that there are no conditions attaching to the future payments (such that the amounts to be received are known with certainty) the author is correct in that the whole amount of...