Tax Saving Ideas – looking to retire from your business?
Sell shares back to the company via a Company Purchase of Own Shares (CPOS) to achieve a tax efficient exit
A company may wish to consider a CPOS if a shareholder wishes to retire and sell their shares in circumstances where a trade sale is not possible and the remaining shareholders do not have the funds to purchase them personally. The company buys the shares back instead. Subject to various conditions, a CPOS can be treated as a capital receipt and subjected to CGT resulting in a 10% tax rate using Business Asset Disposal Relief. A CPOS is often used to allow shareholders to achieve a tax efficient exit from the business where they wish to retire or due to shareholder disagreements, without anyone else buying into the company.
As always, the key to successful tax planning is to seek advice as early as possible.
If you would like more information or would like to discuss your tax affairs in more detail please don't hesitate to contact our Tax Partners, Steve Crompton or Lucy Williams, on the details below: