I wonder if anyone has any advise. I am going through a divorce. We are trying to reach a settlement. We have a family business which we both have 1 x share each in and there are two shares in total. I want to transfer my business share to my husband as part of the settlement and I receive some other assets e.t.c. What are the tax liabilitits for this and what is the best way to go about it? I first filled for divorce over a year ago although we are still living together for financial reasons.
I think you are likely to need to take some advice from your accountant about the tax issues.
You would need to have a value for the business, as the impact of transferring your share, and indeed what other assets it may be reasonable for you to have insted, will depend on what it is actually worth. Depending on the type of and size of the business, this may be something which you an sgree between yourselves, possible with input from your accountant, or it may need a professional valuer. bear in mind that if the business is primarily providingservices (e.g. a small painting and decorating business) the business itself may have little or no capital value, but solely a source of income. (consider, would a stranger pay anything for the business - does it own property, plant or vehivcles or other assets?)
There may be Capital Gains Tax liability if the vlaue of your share has increased since you acquired it, deending on the current and original value of the business. You will also need to check whether there are buness accoutns etc which you are a signatory to, and also check whether you have any busness loans or other securities or guarantees - with small businesses, it is quite common for the business owners to be required to provide personal guarantees for business loans and you would need to ensure that the bank released you from those liabilities as well.
We have a value of the business as we recently had an offer from a purchaser which fell through. we have a value including all the assets building. My solicitor has had a look at the figures and thinks a share transfer or sale of shares to my partner would be possible.
My solicitor is unable to give me advise on the tax liabilities. I have also asked my accountant who has not been very helpful. I have spent quite a lot of money on advise and have not really got anywhere.
From what I have read on the internet a share transfer is more efficient than a share sale? I think the corporation tax can be carried over and paid by my ex when or if he sells the business in the future? Is it correct that there would be entrepreneurs relief and then I think that we would qualify for taper relief we have owned the business for 20 years so would the tax be 10% on 25% of the value?