Buying and Selling a Business

by Kidd Rapinet on September 2, 2010

Parts of the economy are picking up and business sales and purchases are on the increase. The new tax rules on business sales have led to some queries to lawyers. Not all have got off to the bad start from which Ocado suffered on its recent float.

Peter Wood, a partner in Kidd Rapinet’s Farnham office says:

“The Emergency Budget made some important changes for those who are selling a business. Although widely heralded as increasing capital gains tax on any profit on sale of shares (the headline rate increased from 18% to 28% depending on taxable income) there was also an improvement – the entrepreneur’s relief was increased to £5m of lifetime gains taxed at only 10% per person. Thus if five family members work and own shares in the business they can make 5 x £5m = £25m on sale and pay 10% CGT on that. There is also a £10,100 annual tax free CGT allowance for those making smaller gains which each person in a couple will have.”

If you need advice on the best method of selling your business, contact Peter Wood on 01252 713242. There can be substantial differences depending on whether you sell shares or assets. If you sell assets then the company makes the gain and corporate gains are subject to corporation tax and then when you the shareholder of that company take the money out as dividends, it is taxed again.