Selling a business

[steve2]

i am hoping to sell on my business as i am looking to retire (retail shop) to someone already in the trade which will require them to take on a new lease as mine has a year to run.
I am not looking for a fortune for them to buy it but there is high 00s in the bank account so what I’m asking is what would be the best option to minimise tax as i would have to pay capital gains tax on it.
In 2000 i and my colleague paid £16k each to buy the business from our old bosses and then i bought out my colleague for £16k again,
Am i correct in saying i can offset £32k against CGT on what i am offered for the business
I will be speaking to my accountant but would like some input if i can

[Jannerboy]

Yes, theoretically you can deduct the 32k from the sale price. It is basically your cost base (16k initial investment + 16k for the buyout). CGT is only paid on the net profit.

[FlyingPanda]

And don't forget that if you've owned it for over two years, you should be eligible for Business Asset Disposal Relief (BADR) which saves a few percent on your CGT (unless you've already used it - lifetime allowance of £1m)

[HoHoHo]

FlyingPanda said:

And don't forget that if you've owned it for over two years, you should be eligible for Business Asset Disposal Relief (BADR) which saves a few percent on your CGT (unless you've already used it - lifetime allowance of £1m)

Which is currently 14% but rising to 18% in April this year.

I’ve just sold my business after 10 months of DD and negotiating and it was without doubt one of the most stressful experiences I’ve ever experienced!

Edited by HoHoHo on Wednesday 28th January 19:48

[steve2]

Appreciate all the helpful comments

[JonPH]

I’d speak to a tax account early doors to understand the tax. Also ensure you’re getting value for any cash on the balance sheet, ideally at CGT rates rather than dividend extraction.

[HoHoHo]

JonPH said:

I d speak to a tax account early doors to understand the tax. Also ensure you re getting value for any cash on the balance sheet, ideally at CGT rates rather than dividend extraction.

Very good point and moving money around correctly so it’s not taken as dividends is absolutely vital - in my recent sale it saved me at least half a million in tax if not more.

[wattsm666]

You need to know what you are selling, shares in a company or the assets. The original cost may not come into it, if you don’t sell the same item.

[AyBee]

Are profits sufficient to be able to extract as dividends if necessary? Is the buyer likely to need the cash or will they also then need to go through the hassle of extracting? It needs to work for you and the buyer...