The taxes levied at businesses when they are sold are colossal.

But there are ways you can greatly reduce this bill.

An entrepreneur, planning the future sale of his successful business, was referred to us by an existing client. He already had the skill set to make the business grow and planned to float the business in 3 years time.

Your money, not the taxman’s

He wanted to ensure that he and his family were the prime beneficiaries of his years of hard work and NOT the taxman!

We calculated that on the assumed sale price of £10m the Capital Gains Tax liability would be £1.64m (more if the client or his partner had already utilised their Entrepreneurs Relief).

This would leave net proceeds of £8.36m but this forms part of his estate in the UK for IHT purposes. At current rates this is levied at 40%, creating an IHT liability of £3.34m.

On his death, the beneficiaries to his estate receive just £5m from the £10m sale!

Share Release Trust

That is where we stepped in, setting up a Share Release Trust.

The shares are moved into a tax free trust-based environment and the client benefits from the following:

1. Shares can be sold free of Capital Gains Tax
2. Re-investment can be made tax free
3. Income returns are tax free
4. The proceeds of the business sale pass to beneficiaries free of IHT

And here’s the best bit, based on the current valuation of the business of £1m the cost to the client now is £150,000 and no future tax liability. Saving the client literally millions!