Preparation is essential
Good housekeeping and efficient business management are part of running a successful company. But when you’re preparing for a potential sale, pre-transaction planning can make a significant difference. Even if you don’t yet have a buyer, taking action early helps the process run smoothly, reassures prospective buyers and demonstrates a strong management team.
Thoughtful preparation can also reduce the risk of price reductions or warranty claims (or better prepare you for them) under the Sale & Purchase Agreement (SPA), both of which can erode your final sale value.
Key areas to review before a sale
- Extract surplus assets
Consider removing assets not needed in the business, such as investment properties, before the sale.
- Review ownership structure
Introducing a spouse as a shareholder (where appropriate) can provide tax efficiencies and strengthen your planning position.
- Tidy up recordkeeping
Clean, accurate and up to date records help instil confidence and make the sale process smoother.
- Prepopulate due diligence (DD) areas
Having essential documents ready in advance speeds up due diligence, presents an organised and diligent business to buyers, and may help reduce professional fees.
Post-exit wealth management and your tax return
Selling your business is an intense and often emotional process. Once the deal is done and the dust finally settles you may find yourself holding a substantial sum of money. The big questions naturally follow: What next? How will this impact your plans, your future, and your personal tax position?
Plans for the proceeds
Whether you want to pay off your mortgage, take a well-earned holiday, or provide financial support to family members, it’s worth taking time to plan. Speaking with financial and tax advisers early on will ensure you make informed decisions and structure your new wealth in a way that supports your long-term goals.
Rachel Strother, Partner, Private Client Tax, shares her expertise on tax implications and suggestions for tax efficient wealth management:
“After a business sale, your personal wealth profile often changes significantly – along with your exposure to Inheritance Tax. This makes it an ideal time to reflect on your long‑term objectives. You may be thinking about passing wealth to children or grandchildren, supporting future generations, or creating a lasting charitable legacy.
Establishing structures such as a family investment company, trust, charity, or foundation can help you protect and manage the proceeds efficiently while aligning with your values and long-term vision.
PEM’s Private Client team can guide you through your options and help you put robust plans in place to secure the future you envisage.”
Inheritance Tax: what’s changed?
Before the sale, your company may have qualified for Business Property Relief (BPR) or Agricultural Property Relief (APR). After selling, those business assets have typically turned into cash or investments – which no longer qualify for these reliefs. That means the proceeds are now fully chargeable to Inheritance Tax (IHT) unless further planning is undertaken.
From 6 April 2026, individuals will have a £2.5m lifetime allowance for BPR and APR purposes. Any value above this will see 50% of the excess become subject to IHT. Understanding the shift in your estate’s tax exposure is crucial to future planning.
Reporting the sale on your tax return
The disposal of your business must be correctly reported on your personal tax return for the year of sale. If the consideration involves different elements, such as deferred payments or earnouts, it’s important to seek professional advice to ensure the correct capital gains position is declared.
If you are claiming Business Asset Disposal Relief (BADR) or deferring part of your gain into new shares or securities, these details should be included in the white space on your return. This helps HMRC understand your transaction and reduces the risk of future queries or incorrect assessments.
How we can help
PEM’s Private Client team works alongside financial advisers and wealth managers to help you plan effectively for the future. We can advise on the IHT impact of the sale and complete your tax return accurately and on time.
PEM can review your business records and processes, suggest improvements, and help you prepopulate a data room. We can also advise on pre transaction matters such as extraction of surplus assets, ownership changes, and tax efficient structuring.
