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HMRC internal manual

Capital Gains Manual

Gifts: transfer of goodwill at nominal consideration

One common case is for there to be a sale agreement under which various assets of the business are transferred to the company at book value, with the total consideration being credited to directors’ loan accounts. Goodwill is designated as passing at nil or a token sum of 1. Provided that there is no reason for supposing the sale price of any of the assets to be excessive, it is appropriate to take each asset separately. Hold-over relief in these circumstances is available in full on the transfer of the goodwill. You should not attempt to apportion the total sale price between the various assets according to their values.

In a case of this kind you will normally find that the shares have been subscribed for separately in advance of the sale agreement, or purchased from the company promoters.