There is a lot of debate at the moment on the future of capital gains tax and whether the current, historically low, rates will continue into the future. This has led many shareholders to consider selling their businesses. I was talking to a group of shareholders recently, and they asked me a simple question “what are the three most important things we should consider in relation to tax on selling our business?”
Firstly and most importantly, take advice from an experienced adviser who is familiar with the issues. This may be the most important transaction you ever undertake, it could be the culmination of a lifetime of work. Taking the right advice is critical so that there are no unwelcome surprises.
Second, recognise that tax is going to be a cost and focus on your position after tax. Make sure you review and maximise the tax reliefs available and at an early stage. When considering more than one offer, understand how tax may work differently, and focus on net after tax return.
Finally, consider your family wealth planning. Is the wealth that will be realised held in the right hands? Many of my clients take the opportunity to review their inheritance tax position and often create trusts to protect the family wealth for the future.
So, take the right advice, don’t forget about tax and plan for the future.
If you have a query regarding tax considerations when selling your business, get in touch with your usual KPMG contact, or find a Family Office & Private Client team expert here: