Bought wife out of business

[if only a crystal ball]

Hi
I'm a small partnership with a turnover of £300k, I work on my own from home and have recently got divorced. My wife was the other partner and I paid her £60k for her interest in the business.
What is the most tax efficent way of accounting for the £60k, by the way I'm liable for her tax bills.
Please help

Many Thanks

 

[elaine@cheapaccounting]

good lord - was the accounting of this not sorted when you came up with the figure?

Who advised on this?

 

[Rhodes100]

There isnt a tax efficient way of accounting for it I would have thought, the deal is done and the transaction has completed.

Perhaps before completion you might have had options but it seems to me that your wife and therefore you would be liable for capital gains tax on this figure and there is no alternative computation.

 

[Truemanbrown]

Now that the deal is done they doesn't appear to be anything you could do.

Using entrepreneurs' relief you will be paying CGT at a rate of 10% on her gain. Hopefully, your ex-wife will be reasonable and not use up her annual CGT allowance of £10,100 so that you can save £1,010 in CGT.

 

[The Pines]

Hopefully, your ex-wife will be reasonable

What's the punchline???

 

[Truemanbrown]

What's the punchline???

Because if she had some investments/assets and sold them for a gain then she would be using up her annual CGT allowance of £10,100 meaning that the tax bill you pay will be higher.

 

[Tom Egerton]

Were you legally represented in your divorce as this seems a gigantic mess which could have been avoided? "I'm liable for her tax bills" doesn't look like a clause in a divorce agreement to which even the most incompetent solicitor would be party.

It may be clutching at straws but if the divorce agreement (a contract) mentioned the £60K, could you argue that the transfer of the monies related to an event when you were still married?

I'd spend a couple of hundred pounds sitting down with a decent accountant armed with all the information. I wouldn't mind betting that your post hasn't given all of the necessary information to give an informed opinion.