The meaning of 'goodwill' for CGT purposes
05/11/2019

The meaning of goodwill for CGT purposes is complex. The term 'goodwill' is rarely mentioned in legislation and there is no definition of 'goodwill' for the purposes of Capital Gains legislation.

In fact, most definitions of goodwill are derived from case law. At its simplest you could describe goodwill as the 'extra' value of a business over and above its tangible assets.

In the vast majority of cases when a business is sold a significant proportion of the sale price will be for the intangible assets or goodwill of the company. This is essentially a way of putting a monetary value on the business's reputation and customer relationships. Valuing goodwill is complex and there are many different methods which are used and that vary from industry to industry.

HMRC’s internal manual states that:

'Most businesses can be expected to have goodwill even though its value is likely to fluctuate from time to time. The fact that goodwill may not be reflected in the balance sheet of a business does not mean that it does not exist. In the same way, the writing off of purchased goodwill in the accounts of a business does not mean that its value has decreased or that it has ceased to exist.'


About Us

We are qualified and experienced medic accountants and business advisors who have been in general practice for over 20 years having helped medic & dentist clients in meeting their aims of maximizing profits and both retaining and building on the rewards of their hard work.

Newsletter

With our newsletter, you automatically receive our latest news via e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login

Contact Us

Medic Accountants
Cromer Business & Innovation Centre
North London Business Park
Oakleigh Road South
London N11 1GN
Ph: + 44 (0) 207 183 0034
Fx: + 44 (0) 207 100 1082
Registered in Companies House England & Wales

Birmingham office
513 Equipoint,
1506-1508 Coventry Road,
Birmingham
B25 8AD
Ph: 0121 285 4550
Fx: 0121 285 4551

Copyright © 2018 - Medic Accountants company. All rights reserved.  Website Privacy Policy