Selling your business – 10% tax may apply to sale

Source: HM Revenue & Customs | | 12/12/2017

Entrepreneurs' relief applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where entrepreneurs' relief is available CGT of 10% is payable rather than the normal main rate of 20%. This can significantly reduce the amount of CGT due and there is a £10 million lifetime limit.

The lifetime limit means that individuals can qualify for the relief more than once, subject to the overriding condition that 20% CGT will be charged once the total amount of qualifying capital gains exceed £10 million.

The relief is available to individuals as well as some trustees of settlements on the disposal (usually sale) of all or part of a business or the sale of shares or securities in a trading company.

To qualify the individual should be either an officer or employee of the company and own at least 5% of the company and have at least 5% of the voting rights. There are also other qualifying conditions that must be met in order to qualify for the relief.

Entrepreneurs' relief is an important and valuable tax relief for many business owners. There is also a sister relief called investor’s relief which has a separate £10 million lifetime cap. This is useful for investors who do not meet the officer or employee requirement for entrepreneurs' relief.

Planning note

Entrepreneurs' relief is not available to companies or personal representatives of deceased persons or in relation to a trust where the entire trust is a discretionary settlement. The limit applies to all qualifying gains, whatever the year in which they arose.

Before embarking on any sale, it is important to check what reliefs will apply. We would be happy to help you review any planned disposals and help ensure that you pay as little tax as possible.



Accounts

We specialise in preparing end of year statutory accounts for your business, in line with HM Revenue & Customs legislation:

Sole Traders & Partnerships
Limited Companies
Limited Liability Partnerships
Property Management Companies
Property rental income accounts

Read More

Bookkeeping

We can adivise on the best bookkeeping options for your needs and budget, if you would prefer to do the bookkeeping yourself.

There are a number of excellent options including Sage desktop software and market leading online solutions, such as Kashflow & Xero.

Read More

Payroll

ejbc payroll

We can set-up and run your payroll scheme or advise on:

Setting up a new payroll system
Day to day payroll processing
Dealing with PAYE and NI deductions
Completing your end of year returns
Holiday & Statutory pay
Stakeholder pensions

Read More

Start Ups

Starting a Business is an exciting opportunity but at the same time can be daunting.

Why not let us take some of the stress away. We are on hand from the outset to help you through many of the challenges of getting your business up and running successfully.

Read More

sage accountant partnerchartered institute of taxationicaew firm
sage onekashflowxero partner

Search

Contact Us

Office 1 Details

EJBC Chartered Accountants
The Rectory, 1 Toomers Wharf, Canal Walk
Newbury
Berkshire
RG14 1DY

Tel: 01635 46174

  • info@ejbc.co.uk

Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login

 

Twitter Feed