Latest News When exiting a business, planning is key to maximising profits 24th November 2021 When you sell or dispose of all, or part, of your business, you might be able to reduce your final income tax and capital gains liabilities through various reliefs. We will have a look at these reliefs in a bit more detail: Business Asset Disposal Relief Business asset disposal relief (previously known as entrepreneurs’ relief) offers relief against qualifying gains, meaning you would pay tax at only 10% up to the maximum lifetime gains limit of £1 million for qualifying disposals on or after 11 March 2020. Its availability is dependent on certain qualifying conditions being met throughout a qualifying period, usually two years to the date of disposal. There are lots of criteria to meet depending on the type of disposal so it’s always best to speak to your accountant to find out more on the details of this relief. Spouses and civil partners are each entitled to their own lifetime limit of £1 million, potentially doubling the tax savings on offer. Assets can be transferred on a nil gain/nil loss basis between spouses or civil partners, so there is scope for planning here, but it is important to remember that both individuals must still meet the qualifying conditions. For example, in the case of shares, the individual must also be an employee or officer of the company (or of a company in the same trading group) for a 2 year period to the date of disposal. Planning ahead is therefore essential to maximising relief. Gift Hold-Over Relief Business assets may be given to other members of the family. If this occurs then gift hold-over relief may be available, subject to agreement by both parties. This means that the tax on the gain is effectively deferred until the recipient sells the asset. Overlap Relief In the first few years of trading for an unincorporated business, some profits may have been taxed twice because of the way the basis period rules work in these opening years. In this case relief for these ‘overlap profits’ is available on cessation. The overlap profits are deducted when working out the profits for the final tax year. This deduction can create or increase a loss. Terminal Loss Relief This relief may be particularly relevant to anyone who ceases trading as a result of the covid-19 pandemic. A claim for terminal loss relief can be made if the business or individual permanently ceases to trade and makes a ‘terminal loss’. This is a loss made during the 12 month period to the date of cessation. Terminal losses can be carried back and set against profits of the previous three tax years or accounting periods. There are lots of caveats with regards to the information above so we would always recommend that you discuss your exit strategy with us, sooner rather than later, so that we can help you to plan the best and most efficient way for you to exit your business. All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current. News Archive November 2021 (5) October 2021 (4) September 2021 (6) August 2021 (4) July 2021 (4) June 2021 (6) May 2021 (3) April 2021 (3) March 2021 (6) February 2021 (3) January 2021 (16) 2020 2019 Latest News 1 2 3 4 5 6 Privacy Policy Terms Of Service Agreement Twitter Facebook Linked In Forrester Boyd Head Office 26 South Saint Mary’s Gate Grimsby North East Lincolnshire DN31 1LW Tel: 01472 350601 Louth Office — 01507 435961 Scunthorpe Office — 01724 706645 Skegness Office — 01754 802794 Beverley Office — 01482 699319 Hull Office — 01482 699329 Forrester Boyd Chartered Accountants is a trading style of Forrester Boyd, a partnership operated from Grimsby, Louth, Scunthorpe and Skegness. Forrester Boyd Chartered Accountants is a trading style of Forrester Boyd Robson Limited operating from Beverley and Hull. Forrester Boyd Robson Limited is a company incorporated in England & Wales with company number 08370127 and registered office at Kingfisher Court, Plaxton Bridge Road, Woodmansey, Beverley, HU17 0RT and a wholly owned subsidiary of Forrester Boyd. Forrester Boyd Wealth Management is a trading style of FB Wealth Management Limited, which is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate advice on trusts, taxation or Will writing services. © 2021 Forrester Boyd. All Rights Reserved & Trademarks Acknowledged.