Page 19 - Index

• the assets of a trading business after cessation
• shares in the individual’s ‘personal’ trading company
• assets owned by the individual used by the individual’s personal trading company or trading partnership where the disposal is associated with a qualifying disposal of shares or partnership interest.
5% rules for company shareholders
To qualify for BADR, the company needs to be an individual’s personal company where the individual must:
• be a company employee or office holder
• hold at least 5% of the company’s ordinary share capital; and
• be able to exercise at least 5% of the voting rights.
They must also satisfy one of the following tests:
• a distribution test – an individual is entitled
to at least 5% of the company's profit available for distribution to equity holders and 5% of the assets available for distribution to equity holders in a winding up; or
• a proceeds test – an individual is entitled to at least 5% of the proceeds in the event of a disposal of the whole of the ordinary share capital of
the company.
All planned transactions require careful scrutiny to ensure the available BADR is maintained. Remember to keep us in the picture – we are best placed to help and advise if you involve us at an early stage. Investors’ Relief (IR) also provides a
10% rate with a lifetime limit of £10 million for each individual. The main beneficiaries of this relief are external investors in unquoted trading companies.
CGT and non-residents
CGT is normally only chargeable where the taxpayer is resident in the UK in the tax year the gain arose, although the provisions of any double taxation treaty need to be checked. CGT may not apply where the taxpayer becomes non-UK resident before the disposal and remains non-resident for tax purposes for five complete tax years.
CGT and death
There is no liability to CGT on any asset appreciation at your death.
Inheritance tax (IHT) and your
business
Lifetime transfers – For the business owner,
the vital elements in the IHT regime are the reliefs on business and agricultural property (up to 100%), which continue to afford exemption
on the transfer of qualifying property, or a qualifying shareholding.
Transfers on your death – Remember to take into account your business interests when you draw
up your Will. While reliefs may mean that there is little or no IHT to pay on your death, your Will is your route to directing the value of your business to your chosen heir(s) unless the disposition of your business interest on your death is covered by your partnership or shareholders’ agreement.
Your next steps:
contact us to discuss...
• Getting your business ready for sale and minimising the tax due
• Identifying successors within the business
• Exploring possible purchasers
• Valuing your business
• Timing the sale and maximising the sale price
• Planning your transition to your next venture
• Providing for a transfer of your business interests at your death or in the event that you become incapacitated
Page 18
Exiting a Business