Exit your (next) business CGT free

Here’s a challenge: I am going to try not to mention the ‘C’ word today…

Wish me luck!

Fancy a Capital Gains Tax (CGT) Free Exit on your next venture?

I mentioned in a previous newsletter about the prospect of building a business that you could exit ‘CGT free’ given the recent downgrading of Entrepreneurs’ Relief.

So if you could start over again or perhaps for your next or side venture, the question is how could you do it differently to allow you to build a business and exit potentially CGT free…?

Here’s the plan.

You use the Seed Enterprise Investment Scheme (SEIS).

Most people think that the SEIS relief is used solely for business angels to invest in early-stage startup companies (run by other folks).

And it largely is.

But this doesn’t have to be the case.

Structured carefully, it is possible for Founders to start their own business under the SEIS relief and grow it to a CGT free exit after three years - oh, and did I mention the 50% income tax relief on the initial investment into the share capital of the business?!

What’s the catch?

Well, there is one.

There needs to be a minimum of four founders. As no single shareholder can hold more than 30% of the shares, voting rights or rights to assets on a winding up.

So the shares could be divided up as say 25% for each shareholder or maybe three shareholders with 30% each and one with 10% (and other variations in-between, so long as none breach 30% individually). Oh and I’m afraid that relatives e.g. parents, kids, grand-parents etc, can’t get in on the act to make the ‘numbers work’ (including spouses) - although bizarrely, brothers and sisters can co-invest up to 30% each in the same business.

I am brushing over lots of intricate requirements here (which is a second kinda ‘catch’) but the message is that:

if you are considering a new business or side venture and there will be four or more of you collaborating in building it, then this could just be the solution that you are looking for to get over the (recently diagnosed) “Entrepreneurs’ Relief blues”!

Reach out if you would like to explore this planning further.


Blogging for Business: Free Course

“Blogging for business” is Ahrefs’ premium online course on content marketing. Usually, this course costs $799 (allegedly). But for a limited period of time, they’re making it free for everyone.

Included: 4 hours’ worth of advice and tactics on how to grow your blog and turn your readers into paying customers – all directly from their CMO, Tim Soulo. 

Looks like a useful resource - especially if you’re stuck a home….(eek, nearly said it!).

Access it here: https://ahrefs.com/academy/blogging-for-business

Bank of England Base Rate Cuts: Impact on HMRC late payment interest rates

No sooner than the ink has dried on this latest update from HMRC on adjustments to the HMRC rates of interest on late payments (dated 13 March 2020) in response to emergency base rate cuts, they will now have to provide a further update following this latest reduction in the base rate down to 0.1% announced by the Bank of England today.

It never ends. Watch this space.

Take care,