Selling a domain name

[bmd7]

Hi
I'm sure this has been covered before, but I'm interested to 1) find out what the different options are to minimise any tax complications and 2) know whether anyone can recommend a tax/accounting advisor with knowledge in this field.

I recently speculated on a domain name, paid around £15000 for it, but in the process of selling for upwards of £1m. I am a higher rate tax payer, this is not my line of work/trade (this is purely speculative). Do I
1) simply incur 28% CGT on the sale of an asset
2) set up a limited company and sell the shares in it, and thus ownership of the domain? If so, what are the scenarios/potential tax savings etc, and how complicated is this?
3) any other (legal) suggestions?

Before anyone asks, I am not disclosing any details of the domain name.

Thanks

 

[Mitchells Bristol]

Hello there

If you own the domain name personally, then it is likely the disposal will be liable to capital gains tax, and if you are a higher rate taxpayer then the rate payable will indeed be 28%.

In order to mitigate the tax liability, it would be worthwhile considering the likelihood of qualifying for entrepreneurs relief, which could reduce your capital gains tax rate to 10%.

Setting up a limited company at this stage is unlikely to help you, as you would have to transfer the asset at its current market value (i.e. sell it to your company now) before the company sells it on. This is unlikely to secure a txa advantage.

I hope this helps.

 

[bmd7]

Taxonomy, thanks.

In order to qualify for EIS, I would need to have owned it for a year right? Does it also need to be transferred into a limited company, and relief claimed on the shares sold - i.e. it still cannot be for an asset I own personally?

When you say sell it at market value, does that mean at the original price I paid. Market value will differ from buyer to buyer, being an intangible asset, it is hard to put a comparable value to it.

Cheers

 

[NickMoore]

The market value is the best price you could get if you sold it today. So the current market value is £1million.

 

[bmd7]

But this is a private transaction, nobody would be able to prove otherwise. I can certainly go to a few brokers or Sedo/Afternic etc and ask for a valuation/appraisal.

What about transfering this asset purchased personally into a limited company, so debit the P&L with the asset, and credit with a directors loan?
Would that tactic minimize any sale?

Thanks again