Tax Planning for you Business Exit

Selling a business generally creates a tremendous opportunity to pay tax as the monies involved are so significant or a tremendous opportunity to optimise tax with the right advice and strategies.

Although on the surface the tax situation around selling a business looks relatively straightforward, it can get complicated very quickly and needs the right advice from an accountant and wealth manager and decent planning.

For example, as a baseline the business sale will generally be subject to Capital Gains Tax (CGT) of generally 20% as the base rate with Business Asset Disposal (formerly called Entrepreneurs Relief) of 10% on the first £1m for each shareholder.

However, often excess cash in the business and directors' loans can be added into this equation so they only attract CGT. Then there is the matter of property in the business being extracted and SDLT, share rollovers, Trusts and investment strategies for the large sums that are paid at closing, EIS schemes, Employee Ownership Trusts (EOT), and many more.

Doing planning early with a comprehensive strategy is essential. There are many different strategies so being somewhat educated in these areas to at least reality check the advisors is important.