BUYING AND SELLING A BUSINESS IN THE UK

Award Winning
London-Based
Immigration Tax Advisors

BUYING A BUSINESS IN THE UK

There are several reasons to buy a business: you have access to free capital that you want to invest, but you have a limited amount of time and therefore cannot afford to start a new business. If you have a disposable income and think you can steer a struggling business in the right direction. You already own a business and want to grow through acquisition.

However, there are downsides and costs to investing/buying a business to consider: it can be time consuming and extremely tiring. It is likely that any business already has deals that you will need to review. The shopping business will need professional services almost indefinitely. Even with the best scrutiny, a business may have hidden problems that you may not realize until you get started. If the business you are acquiring has employees, make sure they are on your side when making the purchase. Furthermore, there might be additional tax implications of the purchase that you should account for. 

Also, please see Business Investment Relief if you would like to invest in a business or seek a professional Tax Advice.

Selling a Business in the UK

In general, you have to pay UK CGT if you are resident in the UK. Note that if you are resident in the UK, you may be liable to CGT on disposals of assets located anywhere in the world, not just your assets located in the UK. 

However, if you dispose of an asset while temporarily non-resident in the UK, you may be liable to CGT when you return. This may apply to you if decide to live abroad for a few years or if you are posted overseas. 

Broadly, you will be temporarily non-resident in the UK if: 

  • you have been resident in the UK for at least four tax years (out of the seven tax years prior to departure); and 
  • you leave the UK and become non-resident; and 
  • you then return to the UK after a period of non-residence lasting five years or less. 

If there is any doubt over whether or not you have a period of non-residence lasting five years or less, please seek a professional tax advice.Depending on your circumstances, non-residence can be counter-intuitive and may not reflect the period you were physically outside the UK. 

If you are temporarily non-resident, then in the year of your return to the UK any gains or losses realised during your period of non-residence (including in an overseas part of a split year), become chargeable to capital gains tax in the year of return. These rules aim to prevent people from leaving the UK to dispose of an asset just to avoid capital gains tax. You may be able to get some relief if you have paid foreign taxes on these gains.  

If you have any questions or want to book a consultation, you can contact us (link to Contact us page) by requesting a call back or emailing clients@immigrationtax.co.uk.