How to Save Taper Relief

Newsletter issue - March 08.

Taper relief reduces the taxable gain made on business assets by up to 75% and by up to 40% if the assets don't qualify as business assets. However, taper relief will also be withdrawn on 5 April 2008, which has annoyed those who are about to sell their businesses. The new Entrepreneurs' relief will partially restore the taper relief position where you are selling all or part of your business but this does not apply to everyone.

To qualify for entrepreneurs' relief on the sale of shares you have to own at least 5% of the company and be an employee or director of that company for at least a year. If you acquired your shares as part of an employee share scheme, or you don't work for the company, you will lose your taper relief (possibly at 75%) and won't get the entrepreneurs' relief. In order to bank your taper relief you need to sell your shares by 5 April 2008, but you may want to hang on to them, as they are a good investment.

In which case you could sell the shares but use one of the following strategies to reacquire a similar number and value of the same shares:

  • After 30 days you buy back the same number of shares. You need to delay the repurchase by at least 30 days as otherwise your sale and purchase are matched for tax purposes and you can't take advantage of the taper relief. This is a risky strategy as you may have to pay more for the replacement shares if the share price has increased in that 30 day period.
  • Ask your spouse to immediately purchase the same shares. They can then give those shares to you in a no-gain, no loss transfer.
  • Ask the trustees of your Self Invested Pension Plan (SIPP) to buy the same shares as soon as you sell them.
  • Ask the fund manager of your ISA to buy the same shares.

In the last two options (SIPP and ISA) you do not have direct control of the shares but you still benefit from their growth in value in the future.

What our clients say about us...

  • "Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."

    ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT

  • "I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."

    Neil Price - Managing Director at Work Relief Charity Recruitment

  • "Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"

    Lee Westrap MBCS - Director - Bulldog IT Services

Request a Callback
Please complete our form
to request a callback
Get a Fixed Quote

Competitive fixed quotes
for agreed services

Find out how to Make more, Keep more and Work less

Increase your profit and
reduce tax liabilities

Your Business Size?

Expert advice for your
business size

 

Marker

Booth & Co  |   The Hermitage  |   15a Shenfield Road  |   Brentwood  |   Essex  |   CM15 8AG        Telephone: 01277 224666    |   Email: info@boothandco.co.uk