Is there anyway of avoiding paying tax when selling a small business?
I am considering putting up my business for sale, but have been informed by my accountant that 40 - 50% of the sale money will have to be paid in tax. The only solution they have come up with so far it to pay the profit it into my pension and hope you live another 25 years to get the benefit, which doesnt appeal. Does anyone know of a way round this?
United Kingdom - 4 Answers
People Answers, Critics, Comments, Opinions :
Answer 1 :
Don't pay your bills for some months and then it go bankrupt , you will most probably make more that way
Answer 2 :
sell it yourself and don't get an estate agent involved
Answer 3 :
Get shoot of ur accountant is he for real with that idea.. I would rather pay me taxes than hope that plan works out ..
Answer 4 :
Are you sure you've understood what he said? When you sell a business there are usually a number of elements to the sale. Two items, stock and equipment, will be subject to normal income tax and national insurance so the maximum you would pay is 41%. For stock you will be claiming tax relief on the purchase so you are only, in effect, repaying this relief you have claimed. Tax will be payable on any excess you get for the equipment over and above the written down value. Again this is just repaying tax relief you have claimed earlier which has turned out to be too high. The other aspects are property (if you own business premises) and goodwill. Both of these are subject to capital gains tax which is at a maximum of 40% but there are reliefs available. Once you have owned these business assets for a year you would only pay on 75% of the gain and after two years on 25%. This reduces the effective top rate to 10%. Note the CGT rules are changing from next April with a likely flat charge of 18% after the annual exemption (which is over £9,000 at the moment). I would check with the accountant exactly what he meant and also maybe find out what commission he would be paid on your pension contributions.
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