Under current legislation anyone selling a business at the age of 50 or older is entitled to 100% relief on gains up to £50,000 and 50% relief for gains between £50,000 and £200,000.
However, this rule will be scrapped on the 5 April 2003, and replaced by taper relief which reduces the capital gains tax rate depending on how long certain assets have been owned.
Patrick Stevens, tax partner at Ernst & Young, cautioned at owners selling their businesses just to take advantage of the current rule:
‘Selling the business should be a decision you make because the timing is right. The tax position may be part of your calculation but it shouldn’t drive the outcome,’ Stevens said.
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