Tax Relief Options When Selling Your Business

Thinking about selling your business?

Deciding to sell your business brings mixed feelings: on one hand you may feel sad about passing your business on, but on the other hand you probably feel happy about making a successful sale.

Throughout the sale process, though, dealing with the paperwork and nuances of the deal may have distracted you, causing you to neglect your tax responsibilities. However, there are a number of options available to you that can help you to reduce any tax liabilities you may have. You can structure the sale of your business to help with these liabilities too. These are some of the options you can consider:

Entrepreneurs’ Tax Relief

This option means that you pay a reduced rate on Capital Gains Tax (CGT) of only 10%. You have access to £10 million of Entrepreneurs’ relief, but this is a lifetime limit. This is obviously an extremely attractive option for you, but there are some conditions you and your business will need to meet so it is critical that you get advice about the structure of your business to make sure you qualify.

Roll-over Tax Relief

This tax relief applies when you decide to invest the money gained from your business into another business. This means that Capital Gains Tax is not applied until you sell your next investment. Roll-over relief also applies if you invest your capital in unlisted shares (in a company not listed on the stock exchange), or if you give your business away to your children or spouse. In this instance, Capital Gains Tax will automatically be deferred.

Other considerations

Other than qualifying for specific tax relief benefits, there are other options available that can help save you money. You may be able to sell assets from your business and place the money into a pension scheme. However, this option could eventually mean a corporation tax bill. You should also talk to the buyer of your business about how they would like to structure the deal to suit their tax position. This should be demonstrated in the sale price. By reviewing all your options and taking advice from a qualified accountant, like Berley, you can limit your liabilities.

Contact Berley today

Berley are chartered accountants who can help you to plan the next steps you need to take regarding your tax responsibilities following the sale of your business. Working with us can make the transition easier to manage and can also save you money. If you would like to know more about tax relief after the sale of your business, please call one of our experienced tax team to discuss how we can help.

You can call us on 020 7636 9094 or complete our Free Online Enquiry and we’ll be in touch shortly.