The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The value of a company needs to be determined for commercial reasons, for example when the owners intend to sell the company. The main valuation methods are:
industry standard methods
net assets basis
discounted cashflow, and
These are discussed below.
The capitalised earnings basis of valuation is probably the most commonly applied technique in valuing private company shares.
The formula is:
Future maintainable earnings x Price / Earnings (P / E) multiple
Future maintainable earnings are determined as follows:
determine the future anticipated profits:
these should be calculated based on historic audited results
if results are stable then the previous period’s results should be an acceptable basis for determining sustainable profits
if results have fluctuated in the past then judgement will be required to ascertain an average of results
adjust accounting profits to arrive at maintainable profits. Adjustments include:
exceptional items (eg relocation, redundanci
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
This guidance note provides an overview of the partial exemption de minimis rules. This note should be read in conjunction with the Partial exemption overview guidance note. If a business incurs an insignificant amount of input tax which is associated with exempt supplies (exempt input tax), it may
This guidance note provides details of quarterly instalment payments (QIPs) for corporation tax purposes and which companies need to pay their tax liabilities in this manner.Generally, corporation tax is payable nine months and one day after the end of the relevant accounting period. However, large
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s
This guidance note considers the capital gains tax implications where shares are sold in exchange for new shares.The consideration paid by a purchasing company to the shareholder(s) for their shares in a target company could be in the form of either:•new shares in the purchasing company in exchange