The transaction has been finalised and the business has been sold. With a large amount of cash now in your possession, what are your next steps?

There are vast options to consider here and it will depend predominantly on your own circumstances. For instance, you may feel now is the time to fully retire and enjoy the fruits of your labour, or you may be relatively young and looking to move on to your next venture. If you are in the position of the former, it is now the time to consider the transition from a business owner to a passive investor.

A change in your tax position

Before the sale, the wealth you had tied up in the business was in the form of shares. At this time, if you passed away suddenly, the shares could be transferred to your spouse/partner or loved ones with no tax liability (assuming they qualified for Business Property Relief). However, once this wealth is converted into cash, the value suddenly becomes liable for Inheritance Tax (IHT) at a rate of 40% if you were to die – a substantial difference.

Family matters

If not already established, it is important once your business is sold to determine the purpose of the family wealth. The priority of course is safeguarding the future of the family but, after this, there are a multitude of philanthropic activity options available too – such as setting up a charitable trust or a fund to build a wide societal legacy.

How can we help?

Magma’s wealth management and tax teams provide joined up advice and support, to meet whatever the objectives are in a tax efficient manner. Get in touch on 01788 539000 or 0116 261 0061 to find out more.

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