Exit planning services

Business Asset Disposal Relief (formerly Entrepreneurs’ relief) is a very generous and useful tax relief for business owners, especially when you compare the resulting tax rate of 10% with the top rate of 45% income tax. Because sellers benefit from a tax rate of 10% on the first £1 million of gains on business sales with the remainder being taxed at 28%, it remains a very attractive proposition for entrepreneurs to groom a business for future sale.

More than ever, due to the qualifying criteria to qualify for entrepreneurs’ relief and associated reliefs, exit tax planning requires careful, long term consideration and a clear plan from the outset if you are to realise the full value of your many years of hard work.

Top tax planning tips for a successful business exit

To ensure your business attracts the maximum value on sale, take the following into account in your exit planning:

Have a clear view of your goals early in the lifecycle of your business so you create a business that has a clear, intrinsic value without the involvement of the original business founders
Consider how your business would continue if you were no longer a key part and ensure you plan to recruit and train the right staff to allow for this
Run your business with appropriate record keeping from day one. Have the accounts completed accurately and make sure your company secretarial paperwork is up to date – this will save problems later
A good set of records are key when a potential buyer starts the due diligence process – a lack of records and compliance is a common reason cited for a reduction in the selling price of a business and an increase in warranties
Valuing the business properly is crucial to getting the best return. Have a figure in mind as a starting point and then factor into this price how involved you would like to be post sale because it will have an impact on the perceived value of the business to a buyer
At the outset, appoint an advisor who understands your business and will be able to identify current and future potential problem areas you can work on. They will be able to dedicate time to this to free you up to build the business
There are a variety of ways a deal can be structured, with different tax implications, and it will be important to have good advice on the structuring of a sale to ensure you do not pay excessive tax

Tax planning and the benefit of hindsight

Entrepreneurs who have already sold a business will agree that it is worth working with professional advisors and engaging them early in the process. Building a business is an important discipline, whilst selling can be a minefield. Both will require a huge amount of time and effort and it is valuable to have people who can provide the benefit of the experiences of other business owners and other deals.

Do you have an exit plan?

Why not come in and meet us or give us a call?

How to make the most of your tax free allowances

The current tax year (2020-21) will end on 5 April 2021 and we are all expecting tax increases short...

By RJP LLP on 25 February 2021

Business Tax • Coronavirus Advice • VAT

Paying Covid deferred VAT

New guidance from HMRC has outlined how to register for the online service to pay VAT payments that ...

By RJP LLP on 12 February 2021

Business Tax • Coronavirus Advice • R&D Tax Credits • Tax Planning

How do government loans and furlough affect R&D claims?

The quick roll-out of government loans and the ability to ‘furlough’ employees have certainly be...

By RJP LLP on 11 February 2021

I just wanted to drop you a short note to say how grateful I am for the support that RJP has provided over the past 4 weeks while our Financial Controller was away. I struggle to comprehend how much work your staff get through during their weekly visits and they are always a pleasure to have around the office.

I Evans, CFO, Mobliciti

Just a quick e-mail from me to thank you for achieving the target for producing the draft accounts – it is very much appreciated and gives a first class impression of your firm. Many thanks.

J Stanfield, Chairman, BBS Actuaries Ltd

I would like to take this opportunity to thank you very much for the amazing job you have done navigating us through this whole process. My family and I also really appreciate the care and compassion demonstrated by you and your team in every dealing. Our thanks to everyone.

M Goldsmith, Private Client

28 February 2021 - Final self assessment tax return deadline

If you haven’t yet submitted your 2020 self assessment tax return and paid any tax due, you have until 28 February 2021 to submit your return before a penalty is issued. A 5% surcharge also applies to tax which was due on 31 January and is not paid by 28 February.

Get in touch