I am a sole director and own a 70% shareholding in my close company. I wish to sell the customer base (effectively the entire business) to an unconnected large IFA group. The completion date is anticipated to be mid-2026. I will receive the proceeds directly to my personal bank account, omitting the company from the transaction. It is deemed that the goodwill is a direct result of my personal attributes, therefore I personally own it, and not the company. My query relates to the applicable rate of capital gains tax (CGT), as the sale does not fit into the business asset disposal relief (BADR) criteria in HMRC’s Capital Gains Manual. Am I entitled to BADR on the gain, or must I pay the applicable rate according to my income band? 

Arthur replies: 

Firstly, it seems to me that you should make certain that the goodwill is not a company asset. See HMRC’s Partnership Manual at PM163270 (this has similarities to your situation but is very obviously not the same), where mention is made of whether the asset is on the balance sheet of the business (and some other criteria) (e.g., do you have documentation showing that you license the company to use your personally-owned goodwill?). If you are correct in your assumption that the goodwill is a personally-owned asset, then in principle, you could claim BADR within the 'associated disposal' rules. Amongst other things this would require that around the same time as selling the goodwill, you liquidate (see HMRC’s Capital Gains Manual at CG64115) or dispose of the company, and close down the business (see CG63995 onwards).