Pre-Sale Planning

Pre-Sale Planning

Are you considering a sale of your company in the next few years?

If yes, some advance planning now can speed up the sale process and minimise your tax liabilities.

The issues to address may include the following:

  • Surplus property – extract property from a company in a tax efficient manner. It can be time-consuming to structure a suitable demerger and obtain clearance from HMRC.  If your company owns property which you would like to retain post-sale, we strongly recommend that you seek advice well before you start looking for a buyer.
  • Shareholdings – ensure that shareholders meet the conditions to qualify for Entrepreneurs’ Relief where feasible. They can then benefit from the 10% capital gains tax rate.  The conditions must now be met for two years and so this is not something that can be left to the last minute.
  • Trading status – protect the company’s trading status by disposing of investment portfolios and other non-business assets. The shares may be ineligible for Entrepreneurs’ Relief if the company holds significant investments.
  • Dividends – keep dividends as low as possible in the years leading up to a sale in order to maximise the amount which can be extracted as capital proceeds. Higher rate tax-payers pay tax at 32.5% on dividends which compares unfavourably with the 10% capital gains tax on the disposal of qualifying shares.
  • Due diligence – undertake a review of the company’s VAT and Employment Tax affairs. This should identify and resolve any issues that might otherwise be identified during the due diligence process that will be undertaken by potential purchasers.

If this is relevant to you, please contact Anna Jones – anna.jones@kilsbywilliams.com – who will be happy to provide you with a bespoke action plan.