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- How to Use Dividend Waivers to Save Tax(December 2010)
- How to Save Tax with an ‘EFRBS’(September 2010)
- Tax Savings for Entrepreneurs(September 2010)
- How to Buy the Trade and Assets of a Business Without VAT(August 2010)
- Fighting Property Values with HMRC(August 2010)
- How to Claim Relief for Trading Losses - And Don’t Forget Class 4 NIC!(August 2010)
- A “Business” is Better!(July 2010)
- Non-Dom ‘Loopholes’ – Bringing Money Into The UK Tax Free(July 2010)
- Using Your Own Car for Work(June 2010)
- Tax Relief Boost for Business Owners(May 2010)
- Will my council tax be affected if I use my home as a workshop?(May 2012)
- Please advise me on the tax implications of Personal Services Companies?(May 2012)
- Gifts of Money(April 2012)
- Buy-To-Let Property Investment(April 2012)
- Are there any tax benefits to setting up a learning college?(March 2012)
- Signing over property to a child(March 2012)
- Am I able to claim back stamp duty land tax (SDLT)?(February 2012)
- What is the most tax efficient way to be left with most of a £250,000 profit from a sale?(February 2012)
- What would happen if my employer has not been paying my tax?(January 2012)
- CGT or Corporation Tax or both?(January 2012)
What is the most tax efficient way to be left with most of a £250,000 profit from a sale?
I hold a software product within a Limited Company I’ve had for 7 years and have received an option to sell for approx £250,000 to a company on the continent (so no VAT etc. payable). Would a non-UK sale open up other issues I'm not aware of?
Should I:
• sell the software and then take the money into the company? Or
• invest the £250,000 into property (eg Buy To Let residential properties) before the end of my current tax year which would then attract no tax liability that holding the cash would thus saving me around £50,000 in corporation tax, or is it different for property and rather than being seen as a stock purchase and thus bringing down the profit figure it doesn’t? Or
• withdraw the money from the Company personally?
Arthur Weller Replies:
Possibly you are making a mistake that unfortunately a number of people make. If the software is held within the company, then it is not your software. Any sale of the software would be made by the company, the cash from the sale proceeds would belong entirely to the company and the company would be liable to corporation tax on the gain. The company may be able to defer the tax by claiming a special roll-over relief where the proceeds for the assets are reinvested in new intangible fixed assets that are capitalised in the accounts. This roll-over relief follows the same rules as the capital gains relief, i.e. the proceeds must be reinvested within one year before and three years after the date of disposal.
Alternatively, you could sidestep all the above by you personally selling your shares in the company to the purchaser. Entrepreneurs’ relief may quite likely be available to you here to reduce your personal capital gain. But most probably the purchaser will not be interested in buying your shares. You may want to consider offering him a discount on the previously agreed purchase price for the software, to induce him to buy your shares instead.
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- When to Consider the VAT Flat Rate Scheme(January 2010)
- Transport Capital and VAT Allowances(November 2009)
- How to reclaim VAT (insider tip)(June 2009)
- Are you the “senior accounting officer” of a large company?(May 2009)
- Do you believe in using “green” technology wherever possible?(May 2009)
- HMRC puts live podcasts to help you business(March 2009)
- Claiming the VAT Back on Legal Costs(January 2009)
- Do you have 50 or more employees?(December 2008)
- Who is going to pass on the VAT rate cut?(December 2008)
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