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Covid-19: A must read for owner managers!

7th May 2020

Covid-19: A must read for owner managers!

Retiring in a tax efficient manner

Context

Many business owners with solvent companies are now considering whether to cease trading.  In the past they might have expected to sell the company, however the banks’ appetite for supporting buyers has reduced significantly and buyers are expected to demand significant discounts and extended deferred payment provisions if they are to acquire such businesses.    

What you need to know

To close down the company in a tax efficient way there are a number of key factors to consider:

  • Business Asset Disposal Relief (previously Entrepreneurs Relief allowing a 10% tax rate on the first £1 million distributed) may be available when certain conditions are met. The key one being that the business owner makes any distribution within 3 years of ceasing to trade
  • Where the amounts to be distributed (i.e. total realisations less the liabilities and costs of the closure) are less than £25,000, then the distribution can avoid being taxed as income and the company can then be struck off the register by means of an informal striking off.  If they exceed £25,000, to obtain capital treatment the company will need be formally liquidated
  • Under the Anti-Phoenixing provisions, it will not be possible to start up the business again within two years of the closure of the first one

What you need to do

There will be a number of factors to consider when looking to close your business and we can help you navigate those.

Get in touch with our registered Insolvency Practitioner, David Ellis (07515 999503 | david.ellis@higgsandsons.co.uk) or our head of Tax & Business Wealth, Susheel Gupta (07912 121804 | Susheel.gupta@higgsandsons.co.uk) or are waiting to help.

If you have any other general queries or concerns that you feel we can assist with, please email supportingyou@higgsandsons.co.uk and somebody will get back to you as a matter of urgency.

 

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Contact us

3 Waterfront Business Park
Brierley Hill
West Midlands, DY5 1LX

Email: law@higgsandsons.co.uk
Call Us: 0345 111 5050

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