When is it the right time to sell your business?

There will be many factors to consider when making this decision, but a major factor to take into consideration is the tax implications on making such a decision.

At present shareholders are able to take advantage of Entrepreneurs Tax Relief, which allows individuals to sell their shares and only incur a tax charge of 10% on the consideration (subject to conditions).

In the 2018 Budget the Chancellor announced two key changes to entrepreneurs’ relief;

• An extension to the qualifying holding period from one year to two years; and
• A tightening of the rules governing the definition of a personal company – so the share rights an individual must benefit from before they qualify for the relief – introduced with immediate effect. This change requires the claimant to have a 5% interest in both the distributable profits and the net assets of the company.

This indicates that there may be further changes to come, therefore it is important to take advantage of this relief whilst available.

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