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Tips on Planning your exit strategy

Plan your exit strategy: tips

Whether you've just started out or you're close to retirement, it's never too early to start planning for the day you sell or hand over your business.

Here are three essential things to consider when planning your exit strategy:

 

1. Will you keep it in the family?

Is handing your business down to a family member a likely outcome? Do you currently have children or relatives working in the business? Family succession appears to be becoming less common as more young entrepreneurs take advantage of digital technologies to launch their own ventures.

However, business property relief of 100% on a business you control means your business can usually be passed on with no inheritance tax being paid.

2. Get the professionals in

If you're looking outside of the family, the three key things to consider are:

1.       valuing your business

2.       finding a buyer

3.       negotiating the sale.

Lots of factors will affect the value of your business and any potential buyer will want to scrutinise your figures and projections. Finding potential buyers can be a challenge in itself, particularly if your professional network is limited to your local area or sector.

Professional intermediaries - such as accountants, solicitors and financial advisers - can take care of all of this for you to ensure the sale price matches your expectations.

3. How much will you make?

Before you think about the cash injection that the sale of your business will provide to your retirement pot, consider the tax bill. Capital gains tax (CGT) is paid at a standard rate of 18% or a higher rate of 28%, depending on your taxable income and gains.

However, you can make £10,900 of capital gains tax-free and entrepreneurs' relief can reduce CGT to 10% on qualifying gains. There is a lifetime cap of £10 million on the amount of relief you can claim.

 

Contact Knight & Company today

Fill in our contact form, call us on 01628 631056 or email our Senior Partner Geoff Knight at geoffk@knightandcompany.co.uk to start building a strategy for exiting your business.