When you finallly decide to sell a business you've built , its a big decision - both emotionally and financially.  You will have invested a lot of time and hard work over many years and you'll naturally want to get the best possible return. That means thinking in advance about tax efficiency.

Of course, its hard to know when the exit opportunity is going to present itself, but it's good to think about your company structure and shareholding profile in advance?

So what exactly should you keep in mind?

ER - Entrpreneur's Relief

This allows the first £10m of gains for individual sellers to be taxed at 10%, provided you meet certain conditions. It's important to take professional advice to ensure that you are compliant.

SSE - Substantial Shareholing Exemption

This allows corproate sellers an expemtion for Corporation Tax onCapital Gains released on the disposal of sharesin trading companies. Again, a number of conditions must be met.


If the seller receives additional payment on the condition of the company performing well in the future, this is referred to as an 'earn-out'. There are Capital Gains Tax implications, so once again it's essential you discuss your options carefully with an accountant.

Another area to consider is tax-efficient share schemes that encourage your management team to stay and help with the transition - something that will make you particularly attractive to many purchases. It is important, however, to make careful choices over the timing of such arrangements.

It's never too early to start considering the issues involved and if in doubt contact Peter Williams, Corporate & Business Tax Partner on 0161 475 1582 to discuss you position and begin conducting the diligence checks that are so vital pre-sale.