Winding up the business

You might think that winding up a business is a sign of failure. While this is sometimes true, at other times the assets of a business can be worth an awful lot, particularly if you have lots of unsold stock. A thriving market exists in buying and selling business assets. When a wind-up occurs, the business assets are sold off individually to raise money.

From a tax and estate planning perspective, winding up a business can have the same advantage as selling the business as a going concern. Through wind-up, you raise cash that can be used to see through your estate plans. Likewise, the pitfall is the same as when you sell up – you're exchanging an asset with tax breaks (a business) for one with none (cash).

Winding up the business

If you sell business assets for a profit, Capital Gains Tax (CGT) may be due. CGT is charged at a flat rate of 18 per cent.

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