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• Does your business have an heir apparent?
• Will your income stream and wealth be adequate, post-sale?
Meanwhile, business questions might be:
• What are the current trends in the stock market?
• To what extent is your business ‘trendy’ or at the leading edge?
• Is your business forecasting increases to the top and bottom lines?
• How well is your business performing when compared to other, similar businesses?
• Is your business running at, or near, its full potential?
Considering capital gains tax
(CGT)
As a basic rule, CGT is charged on the difference between what you paid for an asset and what you receive when you sell it, less your annual CGT exemption if this has not been set against other gains. There are several other provisions, which may also need to be factored into the calculation of any CGT liability.
CGT reliefs can reduce a 20% CGT bill significantly. It is vital that you consult with us about the timing of a sale and the CGT reliefs and exemptions to which you might be entitled.
Calculating your CGT liability
The taxable gain is measured simply by comparing net proceeds with total cost (including costs of
acquisition and enhancement expenditure). The rate of tax depends on your overall income and gains position for 2022/23. Gains will be taxed at 10% to the extent that your taxable income and gains fall within the upper limit of the income tax basic rate band
and 20% thereafter. These CGT rates are increased to 18% and 28% for ‘carried interest’ and gains on residential property.
A special tax relief, Business Asset Disposal Relief (BADR), is available for those in business, which may
reduce the tax rate on the first £1 million of qualifying lifetime gains to 10%. This is targeted at working directors and employees who own at least 5% of the ordinary share capital of the company and the owners of unincorporated businesses.
The relief is available to individuals on the disposal after two complete qualifying years of:
•
all or part of a trading business carried on alone or in partnership
Exiting a Business
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