If your business has been successful, you are likely to pay capital gains tax (CGT) when you sell it.
If you are selling a company, CGT is charged on the gain on selling shares. This is broadly the sale proceeds less what you paid to buy or subscribe for the shares. Some costs can be deducted from gains, such as legal fees for arranging the sale.
If you sell an unincorporated business, CGT arises on the gain on each chargeable asset – mainly land and buildings, and intangible assets such as goodwill and trade marks. Goodwill is often defined as the value of the business as a whole over and above the market value of the net assets on the balance sheet (equipment, premises, stock, debtors, etc less money owed).
Business assets, including shares in an unlisted trading company, may benefit from entrepreneurs' relief on total gains up to £1,000,000. Broadly speaking the relief reduces the effective capital gains tax rate from 18% to 10%. However, the rules for eligibility are complex, particularly in relation to assets used in a business but owned personally.Last Updated
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