Will You Benefit From Entrepreneurs' Relief When You Sell Your Business/Company?

Wednesday 12th February 2020

The vast majority of small business owners who have sold their enterprises since April 2008 have benefited from being able to take advantage of Entrepreneurs’ Relief and thereby paid Capital Gains Tax (CGT) based on a rate of just 10% (compared with individual seller’s income tax rates which can be as high as 45% and which would otherwise apply). Consequently, this has been a highly discounted rate and cherished benefit from a seller’s perspective.

So far, so good, but things could be about to change!

In their recently published manifesto (just prior to the latest general election) the Conservative Party signalled its intention to ‘review and reform Entrepreneurs’ Relief’. It follows – and I am sure that I am not alone in assuming this – that such a review is likely to result in a higher rate of CGT in respect of small business and company sales.

The message for prospective sellers is therefore quite straightforward; if you are contemplating a sale of your business (on a goodwill and fixed assets basis) or your trading company (via a disposal of your shares) you would be well advised to make your move sooner rather than later! Moreover, I suggest that a conversation with your accountant to discuss the tax implications relating to a sale should be your first, urgent step.

Roger Mundy
Managing Director, Beardsley Theobalds - the specialist business transfer agent