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Post Business Sale – What do I do now?

Our clients, an ageing husband and wife, were the owners of a medium-sized company in the oil and gas sector. The couple had two children, neither of whom worked in the business. Following a period of negotiation, the company was sold for just over £23m. Having advised the clients through the sales process, we then worked with the couple to assess and shape their future intentions.

The sale had resulted, at the time, in the client paying some Capital Gains Tax (CGT) at 10% but some at 28% (the top rate at the time). EQ were set the remit of helping our clients with their future income tax, CGT, but also with their exposure to Inheritance Tax (IHT).

How we helped our client
Whilst our clients were happy to pay CGT at 10%, the gains exposed to 28% were more than they were willing to pay. At the same time, our clients now had a taxable estate for IHT of over £25m.

In conjunction with a financial advisor recommended by EQ, the possibility of making Enterprise Investment Scheme (EIS) investments was discussed. Spread over three tax years, our clients invested £1.5m each, in three tranches of £500K each. The benefits for tax purposes were:

  • Income tax savings of £450,000
  • CGT deferral of £840,000
  • IHT savings after two years of £1,200,000

Advice does not stop when a business is sold, and EQ are now working with the clients to reduce their IHT exposure with a gifting/investment strategy.

For more information or to discuss further, please contact the Private Client Taxperts.

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