Capital Gains Tax

Toto

Hi, I have a quick question. If I decide to sell a business for lets say £300,000 how much capital gains tax will I need to pay from the sale? Is it 40%? I've never sold a business before so I am slightly confused by the whole thing. This particular business is a limited company with 2 directors owning 50% shares each, it holds £100,000 in equipment assets.

richt71

Unless rules have changed recently any profit from selling your business is not taxed. It's classed as a benefit to encourage people to start businesses. Check with an accountant though.

WHA

Depends on whether the directors are selling the limited company, or whether the limited company is selling its assets, leaving the directors with a limited company having no business but a shed load of cash. VERY different tax each way, so we can't really offer any advice until we know more precisely what you are intending.

(Sadly the above poster is wrong about profits on sale not being taxed - if a limited company sells its assets, it is liable to corporation tax, if an individual sells their shares in a company, it is liable to capital gains tax, but with various reliefs)

richt71

WHA wrote: »

Depends on whether the directors are selling the limited company, or whether the limited company is selling its assets, leaving the directors with a limited company having no business but a shed load of cash. VERY different tax each way, so we can't really offer any advice until we know more precisely what you are intending.

(Sadly the above poster is wrong about profits on sale not being taxed - if a limited company sells its assets, it is liable to corporation tax, if an individual sells their shares in a company, it is liable to capital gains tax, but with various reliefs)

Ok sorry. I sold a company as a going concern a few years ago and paid no tax after advice from my accountant. Not sure how it's done but that was the upshot of it! Didn't mean to mislead anyone.

Murdina

VAT is not charged on a transfer of a going concern. This maybe what you are thinking of. If you sold an unincorporated business which comprised broadly just machinery, equipment and stocks (maybe leasing premises) then it is quite possible you did not make a capital gain as such or that the amount you sold it for took you beneath the CGT annual exemption, since in such a sale CGT only due on - broadly - goodwill and premises.
Key point these days with any business sale is are you entitled to business asset taper relief and if so at what rate? This relief can effectively cause 75% of any gain on sale to drop out.