Sell up or pass on to his children?

[Morse]

I would be grateful for some initial guidance on a business related tax issue before seeking professional advice.

A close friend is considering the sale of his successful Ltd business, built up over many years. He is nearing retirement and none of his children have chosen his area of specialism - hence there's no natural successor.

What are the tax implications/benefits for selling the business now, as opposed to handing the business over to his children for them to carry on the family name (they would presumably 'own it' but have to employ someone to physically 'run it'.

My concerns were whether CGT is relevant, or potentially IHT (the value of the business far exceeds the nil rate band)

Any advice would be most welcome - thanks.

[jamesconstantine]

Whether there is a sale at arms langth or a gif, does not make any difference for CGT - market value will be uplifted and applicable reliefs will kick in to reduce any gain (depending on whether the business is a trading or non-trading entity).

If the shares are business property, the gift should be exempt from IHT if shares held for at least 2 years prior to the transfer.

James Constantine, Chartered Certified Accountants
http://www.taxadviceuk.com
FREE Weekly Tax Tips for the small business owner in understandable language

[rajatnr]

i had a 2bed room flat witch was let and a house i have is parcialy let. i could not keep up to the mortage. so i sold my flat and paid for the house mortage. this is my business.i would like to know if i have to pay capital gain.though i invested every single paney into the business.