Selling up business for lump sum

edited 28 April 2018 at 8:40AM in Small Biz & Charities' MoneySaving
9 replies 1.5K views
Software_manSoftware_man Forumite
5 Posts
I may have a potential buyer for my business netting around £200,000+Vat. This would be intended for my retirement but would mean 40% to the tax man because of existing earnings. I don't want to avoid paying tax, I want to pay it as I draw from it over a period of years. What if for example, I set up a new sole-trader business buying and selling Gold, Silver, Copper etc. Wouldn't that just become stock that I could potentially 'Sit on' where the value may go up or down? Then through my retirement as I converted said Gold into cash I would pay tax on what I draw each year. Limiting what I draw to be within the basic rate threshold. This would still be a business, is it legal? What is the difference between doing this and re-investing £200k in housing etc. To me it's just easier to convert back into cash as and when it's needed and then pay tax on it.

Replies

  • 00ec2500ec25
    9.1K Posts
    ✭✭✭✭
    you have a business worth 200K
    you are approaching retirement
    you are trying to plan for that based on freebie advice from the internet?

    why do you think it will be taxed at 40% since you state it is a business being sold?
    what does your accountant advise on selling the business as they know more about tax than you do, (hint: entrepreneur relief)?
  • Used to use an accountant but then chose to simply do self assessment. This is not relying on social media to plan my retirement it is a fact finding mission browsing the net. There are lots of professionals on here that don't mind giving the nod in the right direction ... unfortunately you're not one of them but thanks all the same.
  • PennywisePennywise Forumite
    13.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    There are lots of professionals on here that don't mind giving the nod in the right direction ... unfortunately you're not one of them but thanks all the same.

    You must have missed the nod in the right direction that s/he gave you then!!
  • antrobusantrobus Forumite
    17.4K Posts
    ✭✭✭✭✭
    I may have a potential buyer for my business netting around £200,000+Vat. This would be intended for my retirement but would mean 40% to the tax man because of existing earnings. ...

    No it doesn't. You pay Capital Gains Tax. Maximum rate 20%. And you might qualify for retirement relief and end up paying nothing.

    Get an accountant to sort it out.
  • edited 28 April 2018 at 3:52PM
    00ec2500ec25
    9.1K Posts
    ✭✭✭✭
    edited 28 April 2018 at 3:52PM
    antrobus wrote: »
    No it doesn't. You pay Capital Gains Tax. Maximum rate 20%. And you might qualify for retirement relief and end up paying nothing.

    Get an accountant to sort it out.
    except that retirement relief ended on 5 April 2003 and was replaced with .... hint ;)

    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63200
  • antrobusantrobus Forumite
    17.4K Posts
    ✭✭✭✭✭
    00ec25 wrote: »
    except that retirement relief ended on 5 April 2008 and was replaced with .... hint ;)

    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63200

    OK.We now have Entrepreneurs' Relief. That's the trouble with blinkin tax; they keep changing it. :)

    Which is why the OP should get themselves a proper accountant.
  • No problem getting an accountant just arming myself as much as possible beforehand.
  • rhysadamsrhysadams Forumite
    301 Posts
    Tenth Anniversary 100 Posts Combo Breaker
    ✭✭
    Surely you would qualify for Entrepreneurs' Relief or Capital Gains tax.

    Accountants are good with numbers, but I'd suggest talking to a financial adviser and a tax adviser. I'm not sure if I can recommend people in here, but when I sold my business I actually used a specific person who helped on all aspects.
  • 00ec2500ec25
    9.1K Posts
    ✭✭✭✭
    rhysadams wrote: »
    Accountants are good with numbers, but I'd suggest talking to a financial adviser and a tax adviser.
    errr accountants deal with closing down business much more than financial advisers would and accountants know a lot more than an IFA in that context.
    I agree that a Chartered Tax Adviser (ie a professionally qualified person) would be suitable as an alternative to an accountant if the winding up is straight forward .
This discussion has been closed.
Latest MSE News and Guides

Students - apply for uni funding NOW

If you plan to get a place via 'clearing'

MSE News

A guide to council tax bands

Lower your band & save £1,000s

MSE Guides