Personal tax
As published on the official Gov.org website, if you are a UK tax resident and you hold a bank accou...
By RJP LLP on 22 November 2023
Business Asset Disposal Relief (formerly Entrepreneurs’ relief) is a very generous and useful tax relief for business owners, especially when you compare the resulting tax rate of 10% with the top rate of 45% income tax. Because sellers benefit from a tax rate of 10% on the first £1 million of gains on business sales with the remainder being taxed at 28%, it remains a very attractive proposition for entrepreneurs to groom a business for future sale.
More than ever, due to the qualifying criteria to qualify for entrepreneurs’ relief and associated reliefs, exit tax planning requires careful, long term consideration and a clear plan from the outset if you are to realise the full value of your many years of hard work.
Top tax planning tips for a successful business exit
To ensure your business attracts the maximum value on sale, take the following into account in your exit planning:
- Have a clear view of your goals early in the lifecycle of your business so you create a business that has a clear, intrinsic value without the involvement of the original business founders
- Consider how your business would continue if you were no longer a key part and ensure you plan to recruit and train the right staff to allow for this
- Run your business with appropriate record keeping from day one. Have the accounts completed accurately and make sure your company secretarial paperwork is up to date – this will save problems later
- A good set of records are key when a potential buyer starts the due diligence process – a lack of records and compliance is a common reason cited for a reduction in the selling price of a business and an increase in warranties
- Valuing the business properly is crucial to getting the best return. Have a figure in mind as a starting point and then factor into this price how involved you would like to be post sale because it will have an impact on the perceived value of the business to a buyer
- At the outset, appoint an advisor who understands your business and will be able to identify current and future potential problem areas you can work on. They will be able to dedicate time to this to free you up to build the business
- There are a variety of ways a deal can be structured, with different tax implications, and it will be important to have good advice on the structuring of a sale to ensure you do not pay excessive tax
Tax planning and the benefit of hindsight
Entrepreneurs who have already sold a business will agree that it is worth working with professional advisors and engaging them early in the process. Building a business is an important discipline, whilst selling can be a minefield. Both will require a huge amount of time and effort and it is valuable to have people who can provide the benefit of the experiences of other business owners and other deals.
Do you have an exit plan?
Business Services • Business Tax • Personal tax
We have written a couple of articles about this issue and given how much money could be at stake, he...
By RJP LLP on 22 November 2023
Business Services • Business Tax • Personal tax
Today’s Autumn Statement was widely leaked over the past few days but it’s never official until ...
By RJP LLP on 22 November 2023
I wanted to write and express our gratitude for your help and hard work in getting Probate through and settling all the taxes. I am so pleased that we selected RJP, as your professional help and updates throughout this process have been invaluable. If at any time in the future Probate assessment may be needed, you will be our first port of call. Once again, many thanks to the whole team.
Dan Cook, Probate clientI just wanted to drop you a short note to say how grateful I am for the support that RJP has provided over the past 4 weeks while our Financial Controller was away. I struggle to comprehend how much work your staff get through during their weekly visits and they are always a pleasure to have around the office.
I Evans, CFO, MoblicitiJust a quick e-mail from me to thank you for achieving the target for producing the draft accounts – it is very much appreciated and gives a first class impression of your firm. Many thanks.
J Stanfield, Chairman, BBS Actuaries LtdI would like to take this opportunity to thank you very much for the amazing job you have done navigating us through this whole process. My family and I also really appreciate the care and compassion demonstrated by you and your team in every dealing. Our thanks to everyone.
M Goldsmith, Probate ClientRJP provide our company with a complete service which takes the stress and strain away from the day to day running of our accounts! Their understanding of our business and their patience and advice is invaluable.
Outsourcing Client
60 Day Deadline for CGT Returns and Tax Payments
If you sell a property and incur capital gains tax on the transaction, you will need to file a tax return and also pay any tax that is due within 60 days of completion, or penalties will arise. Need help with your property taxes? Talk to us.