SOLD SALE SOLD

What you think the business is worth and what someone will pay for it are usually different figures and will be the subject of negotiation. The seller will need to understand what taxes will be payable, and when.

If you are selling the assets of the company you will pay corporation tax on any capital gains and the shareholders will pay capital gains tax when the company is wound up, so there is a double layer of taxation.

Editor’s comment:

As can be seen many of the questions that business owners ask themselves when considering selling their business have tax consequences. Indeed, tax is often one of the drivers when considering how to structure a sale (although clearly should not outweigh any commercial considerations).

ETC Tax have significant experience in assisting clients planning for a sale. Please do contact us for help.

Further information can be found here

Q. And what tax do I pay when I sell the shares or wind up the company after selling the assets?

A. In most cases the proceeds from the sale of shares (on a sale or winding up) will qualify for Business Assets Disposal Relief (formerly Entrepreneurs’ Relief) so the first £1m of gain is taxed at 10% (20% on gains above that). It is important that the seller meets the qualifying conditions.

For married couples/civil partnerships consider splitting the shareholdings between two, if not already done, to maximise allowances/tax rates.