Which tax do I pay for selling a business in UK?

Which tax do I pay for selling a business in UK?

Didn't find your answer?

Hello,

I'm the owner/Director of a limited company in the UK. There is another shareholder.

If I sell my company, whihc tax do I pay? Is it capital gains? And how much?

Does the shareholder also pay this tax?

Thanks

Replies (49)

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By pauld
01st Dec 2023 15:23

Give me strength !

Thanks (4)
Replying to pauld:
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By Kabu
01st Dec 2023 16:20

pauld wrote:

Give me strength !

Thanks for your input to a valid question.

Thanks (0)
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By SXGuy
01st Dec 2023 15:29

You pay, somewhere between 1 and infinity. Because that's the amount of tax you pay with absolutely no information to go on what so ever.

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Replying to SXGuy:
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By Kabu
01st Dec 2023 16:22

SXGuy wrote:

You pay, somewhere between 1 and infinity. Because that's the amount of tax you pay with absolutely no information to go on what so ever.

I am just want to know what tax and a percentage. I'm not hiring you to do my accounting.

Thanks (0)
Replying to Kabu:
By Ruddles
01st Dec 2023 16:25

Kabu wrote:
I am just want to know what tax and a percentage.

Between 0% and 39.35%. Does that help?

Thanks (3)
Replying to Ruddles:
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By Kabu
01st Dec 2023 19:54

Ruddles wrote:

Kabu wrote: I am just want to know what tax and a percentage.

Between 0% and 39.35%. Does that help?

It helps more than "1 to infinity"

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Replying to Kabu:
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By Leywood
01st Dec 2023 17:03

Rude.

Ask who you have hired then.

This forum is not a free tax advice helpline for members of the public.

Thanks (2)
Replying to Leywood:
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By Kabu
01st Dec 2023 19:56

Leywood wrote:

Rude.

Ask who you have hired then.

This forum is not a free tax advice helpline for members of the public.

My reply was rude but you missed his comment about "1 to infinity"

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Replying to Kabu:
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By Leywood
01st Dec 2023 21:56

I didn’t miss his response at all.

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Replying to Kabu:
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By SXGuy
01st Dec 2023 17:10

Please explain to me how anyone would know what tax you'd pay without knowing what gain you've made?

It isn't about being your accountant, it's about using common sense.

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Replying to SXGuy:
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By Kabu
01st Dec 2023 20:00

SXGuy wrote:

Please explain to me how anyone would know what tax you'd pay without knowing what gain you've made?

It isn't about being your accountant, it's about using common sense.

Common sense would be to know that you can still answer the question by giving a rough percentage.

Thanks (0)
Replying to Kabu:
RLI
By lionofludesch
01st Dec 2023 20:18

Kabu wrote:

SXGuy wrote:

Please explain to me how anyone would know what tax you'd pay without knowing what gain you've made?

It isn't about being your accountant, it's about using common sense.

Common sense would be to know that you can still answer the question by giving a rough percentage.

Sorry, fella. Afraid that's nonsense.

Thanks (1)
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By Tax Dragon
01st Dec 2023 15:36

If, as seems reasonable to infer, you are not in the UK, be aware of the potential for a 60-day reporting requirement. Does the company have a UK accountant who can advise you?

Thanks (1)
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By FactChecker
01st Dec 2023 15:39

*Please* appoint an accountant to advise you.

Before you get anywhere near understanding which taxes *may* be applicable (depending on hundreds of undefined factors) or how much or when ... you might wish to start by gaining an insight into sentences like "I'm the owner/Director of a limited company in the UK. There is another shareholder." vs "my company".

Thanks (2)
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By Tom+Cross
01st Dec 2023 16:17

If you need to ask the question, be prepared to properly pay, for an answer. In any event, not an internet forum.

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Replying to Tom+Cross:
By Ruddles
01st Dec 2023 16:23

Or ...

If you need to ask the question, be prepared to properly ask it.

Thanks (4)
Replying to Ruddles:
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By Kabu
01st Dec 2023 20:01

Ruddles wrote:

Or ...

If you need to ask the question, be prepared to properly ask it.

If I wasn't a layman I wouldn't need to ask the question.

Thanks (0)
Replying to Kabu:
By Ruddles
01st Dec 2023 20:28

That wasn’t my point, which was that if you want a helpful answer then learn to phrase your question properly, and provide sufficient relevant information.

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RLI
By lionofludesch
01st Dec 2023 16:52

"If I sell my company, which tax do I pay? Is it capital gains? And how much?"

Love these questions.

Thanks (1)
Replying to lionofludesch:
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By Kabu
01st Dec 2023 20:03

lionofludesch wrote:

"If I sell my company, which tax do I pay? Is it capital gains? And how much?"

Love these questions.

What do you love about it? Making fun of a layman who's asking for help?

Thanks (0)
Replying to Kabu:
RLI
By lionofludesch
01st Dec 2023 23:27

Kabu wrote:

lionofludesch wrote:

"If I sell my company, which tax do I pay? Is it capital gains? And how much?"

Love these questions.

What do you love about it? Making fun of a layman who's asking for help?

No. The notion that we can plait sawdust for you.

Thanks (1)
stonks
By WinterDragon
01st Dec 2023 17:15

Hi Kabu,

What some of my industry colleagues are trying to say is your question is bit more complex than you may realise. I am sorry to say you have likely stumbled across the wrong forum as we are a bunch of miserable sods that take every opportunity to exhale out our noses. I'll link some Gov.uk pages that might be relevant and then you'll probably want to engage an accountant properly as this can be a difficult one to get right.

https://www.gov.uk/tax-sell-shares

https://www.gov.uk/business-asset-disposal-relief

Thanks (3)
Replying to WinterDragon:
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By Tax Dragon
01st Dec 2023 19:14

As you say, they only might be relevant. While I prefer the tone of your response to some of the others, it would be wrong to imply that it was necessarily any more helpful.

The trouble with UK tax law is ludicrous complexity. The trouble with gov.uk is excess oversimplification (to the point of error).

Thanks (3)
Replying to Tax Dragon:
stonks
By WinterDragon
01st Dec 2023 19:49

Ah my long lost dragon sibling.
I was hoping that OP might read it, get confused and give in if they were hoping to calculate it properly for themselves. I'm all for letting a punter have a go to scrawl a guess on back of a packet of Benson and hedges.
I'm sure there's something to be said about leading a horse to water...

Thanks (0)
Replying to WinterDragon:
By Ruddles
01st Dec 2023 20:02

WinterDragon wrote:

I'm sure there's something to be said about leading a horse to water...


As in - you can lead a punter to the answer, but you can’t make them think.
Thanks (1)
Replying to WinterDragon:
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By Tax Dragon
01st Dec 2023 20:12

WinterDragon wrote:

Ah my long lost dragon sibling.
I was hoping that OP might read it, get confused and give in if they were hoping to calculate it properly for themselves. I'm all for letting a punter have a go to scrawl a guess on back of a packet of Benson and hedges.
I'm sure there's something to be said about leading a horse to water...

While I confess I haven't bothered reading through the pages you linked to, I'd fall off my chair if they enabled the reader to establish when either the 39.35% rate or a 60-day return was relevant - though neither possibility is inconsistent with the facts with which we were presented.

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Replying to WinterDragon:
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By Kabu
01st Dec 2023 20:06

Thank you for being the only person here who understands that not everyone is a professional accountant.

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Replying to Kabu:
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By Leywood
01st Dec 2023 22:00

Every tespondent on here understands that you aren’t an accountant. Your OP was a dead giveaway. The fact that you aren’t asking the right questions is a dead giveaway. The fact that you expect, almost demand help, is a dead giveaway.

What you absolutely do need is an Accountant. One whom you engage properly and pay for.

Thanks (2)
Replying to Leywood:
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By Kabu
01st Dec 2023 22:25

Leywood wrote:

Every tespondent on here understands that you aren’t an accountant. Your OP was a dead giveaway. The fact that you aren’t asking the right questions is a dead giveaway. The fact that you expect, almost demand help, is a dead giveaway.

What you absolutely do need is an Accountant. One whom you engage properly and pay for.

When did I demand help? I posted a question and all I've gotten since then is a bunch of condescending snobs replying thinking they are somehow superior to me because they know more accounting than I do.

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Replying to Kabu:
RLI
By lionofludesch
01st Dec 2023 23:26

Kabu wrote:

Thank you for being the only person here who understands that not everyone is a professional accountant.

Yet this site holds itself out as being specifically for professional accountants.

Thanks (3)
Replying to lionofludesch:
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By Kabu
02nd Dec 2023 10:57

lionofludesch wrote:

Kabu wrote:

Thank you for being the only person here who understands that not everyone is a professional accountant.

Yet this site holds itself out as being specifically for professional accountants.

If I had known that, I wouldn't posted my question.

Thanks (0)
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By AdamJones82
01st Dec 2023 20:44

AccountingWeb forum, the gift that keeps on giving

Thanks (6)
DougScott
By Dougscott
02nd Dec 2023 09:21

Hi Kabu,

I think the point everyone is trying to make is that you need to hire a professional accountant to ask you the right questions and come up with the answer and possible scenarios/strategies to help you minimise tax on the future sale of your business. A good accountant should pay for themselves in tax savings. I find itsuprising that you don't employ an accountant to deal with your company affairs already to be honest.

Thanks (1)
Replying to Dougscott:
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By Kabu
02nd Dec 2023 11:06

A civilised response, thank you.

I understand what you are saying but there was no need to be rude about it. It was a general question and I was thinking ahead.

If I had know that the group of users of this site are rude, arrogant, condescending snobs, I would have never posted the question.

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Replying to Kabu:
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By MinimalDamage
06th Dec 2023 13:52

Sorry, but the tone of your question dictated the tone of the response.

And I can only infer that you do not already have a Uk advisor because you’re trying to save yourself some money on fees.

So you have the following options available:

1. Get a good advisor who will guide your company providing advice specific to your circumstances in the most tax-efficient way.

2. Wait until things go pear-shaped and then get an advisor who will need to get you out of trouble and charge you accordingly, which may cost more than option 1.

3. Get a not so good advisor who will charge you less and do a not so good job. Or will do a good job but will call you names in return.

Had you familiarised yourself with the kind of forum this is or known that accountancy/tax is not a charitable service, you would not have posted a question on this forum and got in touch with a few practices instead to discuss your particular circumstances. They might even give you some valuable advice for free.

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Replying to MinimalDamage:
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By Kabu
06th Dec 2023 14:38

The users on here assume a lot after reading a one post.

You are right about one thing, if I had know about the self-important, rude and arrogant userbase of this forum, then I would not have posted here.

The users on this forum will put anyone off hiring any accountant.

Just look up this website's score on Trustpilot, 2.8/5. It shows the kind of help you guys give to people like me.

If you can't answer the question and only want to assume things, then move on and don't reply.

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Replying to Kabu:
RLI
By lionofludesch
06th Dec 2023 14:49

Kabu wrote:

If you can't answer the question and only want to assume things, then move on and don't reply.

We have to assume when no information is given.

No idea why the site is even on Trustpilot. It doesn't hold itself out as a service to the public, nor does it charge.

Thanks (2)
Replying to lionofludesch:
Stepurhan
By stepurhan
06th Dec 2023 15:42

lionofludesch wrote:

No idea why the site is even on Trustpilot. It doesn't hold itself out as a service to the public, nor does it charge.


There are only 3 reviews. Two of them are people with as little understanding of what the site is for as the current OP.

As an aside, any score based on only 3 data points is based on too little data to have any meaning. More people than that have responded to this thread alone, so it is extremely unlikely to be representative of the view of the average regular user.

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Replying to lionofludesch:
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By Kabu
06th Dec 2023 17:07

lionofludesch wrote:

Kabu wrote:

If you can't answer the question and only want to assume things, then move on and don't reply.

We have to assume when no information is given.

No idea why the site is even on Trustpilot. It doesn't hold itself out as a service to the public, nor does it charge.

Why couldn't any of you assume that I was just after a rough percentage of tax which has to be paid?

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Replying to Kabu:
paddle steamer
By DJKL
06th Dec 2023 17:16

Because that could range from possibly 10% CGT to maybe 45% IT, though actually at a certain sweet spot effectively 60% IT. (plus maybe some NI)

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Replying to Kabu:
RLI
By lionofludesch
06th Dec 2023 17:17

Kabu wrote:

Why couldn't any of you assume that I was just after a rough percentage of tax which has to be paid?

We did. But the rate depends on how big the gain is and we couldn't prise that simple bit of information out of you.

So you're stuck with "somewhere between zero and 40%".

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Replying to lionofludesch:
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By Kabu
06th Dec 2023 17:55

That would have been a reasonable response. Instead what I started receiving was responses such as "Give me strength", "1 to infinity" and "Love these questions".

Good way to make someone new to the forum feel welcome.

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Replying to Kabu:
RLI
By lionofludesch
06th Dec 2023 17:25

Kabu wrote:

Why couldn't any of you assume that I was just after a rough percentage of tax which has to be paid?

Let me turn that question around. When we all said that there wasn't enough information, why didn't it occur to you that we might need more information? What was so difficult to understand about that?

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Replying to lionofludesch:
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By Kabu
06th Dec 2023 17:57

No, that's not it. I've replied to your other post in which I've given you examples of what responses I received at the start of this thread.

A few people did reply with helpful posts later on in the thread.

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Replying to Kabu:
RLI
By lionofludesch
06th Dec 2023 18:12

Kabu wrote:

No, that's not it. I've replied to your other post in which I've given you examples of what responses I received at the start of this thread.

A few people did reply with helpful posts later on in the thread.

Ah well - there's no telling you, fella. You wander onto a site which specifically says it's for professional accountants and wonder why you get a bit of flak for being a layman.

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Replying to lionofludesch:
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By Kabu
06th Dec 2023 21:05

Where does the website make clear that the forum is for professional accountants?

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Replying to Kabu:
By Ruddles
06th Dec 2023 21:50

Kabu wrote:

Where does the website make clear that the forum is for professional accountants?

https://www.accountingweb.co.uk/about-accountingweb

About AccountingWEB

AccountingWEB.co.uk is the largest independent online community for accounting and finance professionals in the UK

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Replying to Ruddles:
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By Kabu
06th Dec 2023 22:27

Fair enough

Thanks (1)
paddle steamer
By DJKL
02nd Dec 2023 15:42

If the company shares are being sold then likely the shareholders may, and I repeat may, have a CGT liability.

If the company sells its business then it may, and I repeat may, be liable to CT, if you then wind up company then first para may also apply re that winding up, but then again maybe IT will apply.

Everything depends upon particular circumstances.

The catch is we know nothing about what you originally paid for your shares, how you acquired them, what the company does/did and accordingly there is probably not much more that can be said without examining your, and your fellow shareholder's, particular circumstances and looking in detail at the company.

One thing that likely can be said is that just blindly selling anything before taking professional advice as to what is being sold, why it is being sold, whether the company is to be in any way retained, where you want any money to eventually land, is likely asking for trouble and may turn out expensive as other approaches may have been better and cheaper.

Finally selling a company's shares may work out legally expensive as any purchaser will likely not buy without a good pore through the company's accounts and will likely also want a lot of warranties, share sales for a smaller business may not be good value as corporate lawyers tend to be on the expensive end of legal fee levels.

So, take the above advice, see an accountant, also a solicitor, let them investigate your particular position and listen to their advice.

Thanks (2)