Introduction

Whether you are planning to start a business or already have a business up and running, it is important to consider your long term exit strategy. Do you intend to sell the business for as much as you can? Or do you intend to pass it down to your family? If you have not given the matter any real thought stop for a moment and consider the issue. Obviously the commercial considerations are extremely important but what about the tax issues?

In this bulletin we take a look at the key issues to keep in mind in order to minimise capital taxes when passing on a family company. In the space available we are only able to outline the main areas to consider and it is important that detailed advice is sought well in advance of a proposed sale or transfer. In fact, if you have time to think about exit issues when you are first setting up a business, some of the basic foundations for effective planning can be put in place at this early stage.

A long term plan to sell means making sure that the right conditions are in place to minimise the capital gains tax (CGT) on the sale. If you intend for your family to take on the business (and that begs the question whether they want to take it on!), then the primary area of tax planning will be to ensure that inheritance tax (IHT) does not present a problem.

Early planning is sensible and can be very effective. We would be pleased to meet with you to discuss your plans and then to work with you to ensure that whichever way you decide to pass on the business, HMRC will not be the biggest beneficiary.