Avoid cgt when selling business

crysys

Hi,
My partner is planning to sell his business soon and has been told by his accountant that he will be eligible for entrepreneur relief. He's a sole trader but after 34 years will only realise about 100k. We need every penny as we have a large mortgage we'd like to pay off with the money. Can he do anything to avoid or reduce this 10% levy by transferring assets to me or do anything else? Many thanks.

[Deleted User]

Your accountant has already helped you to avoid a considerable amount of VAT by advising you of the availability of entrepreneurs relief. What you are looking is to eliminate CGT altogether on the sale of your partner's business. I would imagine that, if this was possible, your accountant would have detailed how this could be done? What is the make up of the £100k ?

00ec25

and your accountant has advised what when you asked them?

do you as the spouse meet the qualifying conditions?

"Husbands, wives, or civil partners are separate individuals and may each make a claim. They’re each entitled to Entrepreneurs’ Relief up to the maximum amount available for an individual (see Individuals), provided that they each satisfy the relevant conditions for relief (see Qualifying conditions)."

https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-entrepreneurs-relief-2017

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63950p

crysys

Many thanks for the replies. I have read some of the links...not too sure I can wholly grasp the details! The accountants have indicated the entrepreneurial tax relief option but no details have been offered as yet. I don't deal with them directly and my other half (not spouse) doesn't ask the right questions. They haven't indicated how to go about it or about the qualifying period. I don't have a lot of faith in them suggesting money saving options at all. All I really wanted to know is if there are other ways to keep as much capital as possible in a sale. He's only selling the business, an Opticians practice, not the property, which is rented. It mainly constitutes a large client base and equipment and possibly stock. He's not yet put it up for sale but it will be within the next 12 months, I hope.

00ec25

so if he is not a spouse you presumably mean he is your lover rather than your business partner?

it thus appears you have no stake at all in the existing business and any transfer of it to you would be classed as a disposal by him to an unconnected person (ie you, since you are not married to him) and so subject to CGT for him

the answer to your question is thus probably no, he bears the CGT liability in full himself as he is the sole owner of the business being sold, but does so under entrepreneurs relief

chrismac1

Rollover relief is the main way but involves investing in another business.

tps://www.gov.uk/business-asset-rollover-relief

Pennywise

Tax of just 10% is already low. He could invest it in another business, or in EIS/VCT investments to rollover/defer the gain, but that is risky and presumably he wants to use the money rather than tie it up long term.

kidmugsy

crysys wrote: »

I don't deal with them directly and my other half (not spouse) doesn't ask the right questions.

On winding up a business it's pretty easy to spread the Capital Gains over two tax years. On selling, however, I am ignorant. Maybe the accountants haven't volunteered a good wheeze because there isn't one, or maybe because he's not asked them to. Maybe he should get you to accompany him to his next conversation with them.

Myself, if I were selling a business I think I'd want all the purchase price in my hands when I parted company with it. But maybe there's a secure way to accept the purchase price spread over two tax years. But the most you'd save, I think, would be 10% of the CGT allowance less any extra costs for the accountant.

[Deleted User]

kidmugsy wrote: »

On winding up a business it's pretty easy to spread the Capital Gains over two tax years. On selling, however, I am ignorant. Maybe the accountants haven't volunteered a good wheeze because there isn't one, or maybe because he's not asked them to. Maybe he should get you to accompany him to his next conversation with them.

Myself, if I were selling a business I think I'd want all the purchase price in my hands when I parted company with it. But maybe there's a secure way to accept the purchase price spread over two tax years. But the most you'd save, I think, would be 10% of the CGT allowance less any extra costs for the accountant.

The date monies are received is not the main issue. The disposal date will be the date that the contract becomes unconditional.