When you get to sell your business, you will hopefully be able to pay tax on the profit you are making at 10%. This is because of Entrepreneurs Relief which is available through the Capital Gains Tax legislation.
However there are some issues to watch.
The gain subject to 10% is limited to £2million.
It does not apply to companies. So if your business is inside a company and you sell the business rather than your shares in the company, you need to liquidate the company fairly quickly after the sale. Then you can get Entrepreneurs’ Relief on the gain on your shares.
It does not apply to a sale of a single business asset. It has to be a material disposal of business assets.
Watch out, especially in the case of a company, that you are not holding on to too much cash. In extreme cases, the Revenue might argue that your company is in part an investment company and not a trading company. This could restrict the relief on your shares.
So Entrepreneurs’ relief is good news but you need to watch out for the pitfalls.
