Deals can be structured in a number of different ways, which have varying impacts on the seller’s tax position.
We aim to make these differences clear to our clients and to minimise their tax liability.
The major tax consideration in the sale of a business is Capital Gains Tax (CGT). CGT is payable at 28% on the difference between the initial cost of an asset, and the proceeds of the sale of that asset.
However, tax legislation is not that straight forward – there are various reliefs that can be claimed dependent on the individuals circumstances. The most valuable is Entrepreneurs’ relief, which can reduce the tax rate to 10% on the first £10m of a gain (there are many conditions). Other reliefs apply when the proceeds of a sale are re-invested.
Please speak to our tax advisors if you would like assistance with tax planning relating to business sales.
Inheritance tax must also be considered when planning an exit. Shares in private companies are generally exempt from inheritance tax, and a sale may move significant value into your taxable estate for IHT purposes. This is another complex issue that must be planned according to an individuals circumstances.