Tax Hike For Business Owners On Sale Of Business Assets
- AuthorBeverley Bowen
Many business owners look forward to the day when they can hang up their boots and sell their business. Maybe this will happen on retirement or when the business owner is looking for a new challenge. Selling your business is stressful and often time-consuming and there are many tax implications (Capital Gains Tax particularly) to consider. However, very few will give any thought to how the sale will affect their Inheritance Tax (IHT) position.
Business assets often qualify for Business Property Relief which can give full relief from IHT but when those business assets are sold the cash proceeds are liable to pay the full rate of IHT (40%) in the same way as all other non-exempt assets. For some, whose total assets still fall below the available Nil Rate Band (£325,000) then this will not matter. For many business owners however, their IHT bill will increase dramatically.
For example if your estate is worth £600,000 in 2012, consisting of a house worth £250,000, and cash in the bank of £75,000 and a share in a family business worth £275,000, your IHT bill on death would be Nil. If however a year later in 2013 you decide to retire and sell your share of the family business – your estate may still be worth £600,000, but now your potential IHT bill is £110,000.
In summary, getting specialist advice on the sale of your business is of paramount importance. As with all tax problems, much benefit can be had from taking early advice and planning ahead. Even for those who have already completed the sale of their business there are options available for tax planning.
For further advice, please contact our specialist Solicitors in:
- Swansea: 01792 773773
- Cardiff: 02920 225472
- Carmarthen: 01267 234022
- Caerphilly: 02920 860628
- Cowbridge: 01446 771742
- Haverfordwest: 01437 764723
- Fishguard: 01348 873671