One important measure announced in the Budget for business owners was a doubling in the lifetime limit for capital gains tax entrepreneurs’ relief.
The lifetime limit is being increased from £5m to £10m for disposals made on or after 6th April 2011.
Qualifying capital gains are then subject to capital gains tax at 10% rather than 18% or 28%.
This relief was originally introduced on 6th April 2008 along with a previously announced reform of the capital gains tax system.
It is a relief available in respect of gains made on the disposal of all or part of a business, gains made on disposals of assets following the cessation of a business and gains made by certain individuals who were involved in running the business.
It was originally introduced with a lifetime limit of £1m before being increased to £5m in the emergency Budget last June.
Trustees can also benefit from Entrepreneurs’ Relief, when they sell certain assets used in business.
This can apply where the beneficiary of a trust with an interest in possession relating to the business assets is involved in running the relevant business.
The conditions for trustees to make use of Entrepreneurs’ Relief are broadly similar to those for Retirement Relief. The new £10m lifetime limit on gains will apply to the trustees and the qualifying beneficiary jointly.
When selling a business, it is important to understand how the proceeds will fit into your overall financial plans. We have worked with a number of business owners to help formulate a Financial Plan based around the disposal of business assets, particularly for business owners approaching retirement.
As a family owned and managed business, we have a particular affinity with family business owners and the unique challenges they face when planning the sale of a business or handover to a second generation.
Do speak to us if you would like to discuss your Financial Planning in relation to the sale of a business.
Photo credit: Flickr/Robert Gaal
