[neilwilson]

The biggest issue is getting the Capital Gain Tax relief correct.

You have a business that happens to be owned by you and you are selling it to another person (your new company). That is a capital transfer like selling shares or property, and normally would attract Capital Gains Tax.

However there is something called "Incorporation Relief" that allows you to defer the CGT charge until you finally sell the shares. To get that relief you have to transfer all the assets of the business to the new company in exchange for shares.

The book entries for it are a bit involved in the new company and you'll have to make sure you get the process correctly - including filling in your self assessment correctly once you have transferred the business.

There are a couple of other ways of transferring the business that may be better tax wise in the coming years. An overview here: https://www.taxinsider.co.uk/incorporation-relief-and-direct...

HTH

[simontrl]

Thanks! I read the link but not sure how to apply it here, can anyone provide an example for my scenario above?

How do I get a safe evaluation of my solo SaaS? How does my new company buying the SaaS with money or shares work when the company is starting with zero money in it? How much can I look to save/make by doing this and what risk is there of HMRC disagreeing? Is it really stupid to transfer the SaaS without any 'sell' value?

This area seems like a really big deal to me and I can imagine some accountants not doing it correctly.

[neilwilson]

The bookkeeping entries are a bit esoteric but essentially you value the business at a reasonable amount, let's say £100K based on the cashflow (perhaps 3 or 4 times the turnover). Then you tot up the value of the actual material things in the business, so domains and the like might be worth £200 on the open market.

What that means then is you have £200 of 'intangible assets - domains' and £99,800 of 'intangible assets - goodwill', then on the other side of the balance sheet you have '£100,000 - shares issued'.

The £100K of shares you receive for the business then get 'Incorporation Relief' on them so you don't have to find £20K of hard cash to pay Capital Gains Tax.

It's all done with bookkeeping entries, not actual money.