Taper Relief

Thinking of selling your company? The introduction of Business Assets Taper Relief means that you should only pay capital gains tax at 10%. At such a low rate you might think there’s no need for tax planning, but inevitably there may be traps for the unprepared.

The 10% rate only applies if all of your shares have been held for at least two full years – a potential problem if shares have been acquired in stages. You would need to prolong your ownership period without actually delaying the sale. This can be done and provided the purchasing company itself meets certain conditions the taper relief period will continue uninterrupted.

A word of warning on earn-outs though. If the price of your company is partly based on the performance of the business after sale, the extra money you receive if the business does well may not attract full taper relief, even if you’ve owned the shares for over two years.

For any advice on tax planning when you buy or sell a business, please contact:

Belinda Bridgen
Tel +44 (0)20 7440 7432
belinda.bridgen@mishcon.com