Business owners selling up and going into retirement could be losing out on thousands of pounds because of poor planning, a tax specialist has warned.
They may have failed to find the time to prepare a proper exit strategy and therefore not taken advantage of valuable tax reliefs, said Stephen Charles, tax manager of Sheffield-based independent chartered accountants Hawsons, of Glossop Road.
“It seems such a shame that, after a lifetime of hard work building up a business, some owners do not receive the full rewards they are entitled to because they have not taken the trouble to find out about the tax reliefs available.
“For example, capital gains tax Entrepreneurs’ Relief can reduce the effective rate of capital gains tax from 28 per cent to ten per cent, with each individual having a lifetime allowance of £10m.
“This means that the maximum overall tax saving could be £1.8m.”
Stephen says that it is also important to ensure that the business qualifies for inheritance tax Business Property Relief as in the unfortunate event of a death of the owner it may be the difference between the estate paying nil or 40 per cent inheritance tax.
“There are some restrictions and pitfalls for the unwary but it seems a great pity that some owners are not taking advantage of these very generous reliefs.”