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BUSINESS ASSET DISPOSAL RELIEF

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Business Asset Disposal Relief has now replaced Entrepreneurs Relief

Did you know that the tax rate on most business sales is only 10%?

 

Hyde House would welcome the opportunity of exploring your eligibility for qualification for this extremely beneficial rate of tax and to discuss your personal strategy for the ultimate exit from your business.

 

Remember – business sales count for this tax whether a sale to another business or to management or individuals.

Business Asset Disposal Relief - how can it benefit you?

 

Business Asset Disposal Relief was previously known as Entrepreneurs’ Relief and was introduced in March 2020. It is an incentive for business owners which makes it possible to pay tax at a reduced rate of 10% when they sell all or part of their business. 

 

 Currently, only the first £1m of sale value will qualify for the 10% and the rest of the disposable will be taxable at 20% in 2020/2021. This is likely to change at the next Budget. Acting quickly to sell your business may protect your position.

 

Who Can Benefit from B.A.D. Relief? 

 

Sole Trader and Partnership

 

In order to qualify on disposal of a business in 2020/20201, you must have owned the business for at least 2 years and be either a sole trader or in a business partnership. 

 

If, perhaps due to the financial implications of COVID-19, you are planning to close your business, then all business assets must be sold within 3 years to be eligible. 

 

Limited Company

There are 3 conditions that must be met when it comes to disposing of any shares or securities during the 2 years leading up to the disposal: 

 

1. The company’s main activities need to be in trading or it must be the holding company of a trading group. 

 

2. You need to be employed by the company or hold office in the company. 

 

3. You must hold 5% of the company shares and voting rights as well as being entitled to at least 5% of either the profits available for distribution plus the assets on winding up the company or the disposal proceeds if the company is sold. 

 

For further guidance please refer to HMRC www.gov.uk/business-asset-disposal-relief

 

If you are considering a business sale it may be prudent to act now before the Chancellor reduces this relief.

Speak to a Business Sales Expert

 

We offer a free consultation and valuation on a no-obligation basis.

Call us on 0333 3440 778 to have all your questions about selling a business answered by a business transfer expert.