Later in life you get to a stage where you’ll want to retire. This might involve selling your business and then relaxing, knowing you’re financially secure.
Unfortunately, if your company is owned by a number of individuals, the sale can be difficult as not everyone may want to sell.
One of the options is for the other shareholders to buy your shares, either paying with cash they have available or by withdrawing additional income from the company. From a tax perspective, this option would be very expensive for the buyers.
However, there’s potentially a better route available; the company could purchase the shares from the shareholder. The main benefit of this is that the other shareholders don’t need to personally raise funds, which would save them a significant amount in tax. Usually the company’s payment to the retiring shareholder would be taxed as income (which is expensive from a tax point of view) but if the payment meets a number of conditions, it’s possible to tax the payment as a capital gain and this has substantial tax savings.
In addition, for your peace of mind, we can ask HM Revenue and Customs to approve the transaction in advance so we can work out the exact tax liability before you move forward.
Do please get in touch if there’s anything you’d like to discuss.