Selling a Dental Practice – How UK Dentists Can Reduce Capital Gains Tax with Entrepreneurs’ Relief
“What’s the most tax-efficient way to sell my dental practice?”
If you have one or more dental practices it is possible, if not almost certain, that there will come a time when you have to consider selling. This could be as part of your retirement plan or simply as a way of raising cash for another project.
Whatever the reason may be, with dental practices changing hands for substantial sums all across the UK it is important to plan the sale carefully and to deal with the proceeds in a way that leaves you with the maximum possible capital sum after all necessary costs have been met.
Selling your dental practice – the UK taxman wants to help!
In order to make a claim for entrepreneurs’ relief when you sell a dental practice you must claim by the first anniversary of the 31st January following the end of the tax year in which the sale of the practice occurs.
That is the equivalent of one year and 10 months from the end of the tax year in which the dental practice sale is made. Therefore, for a qualifying dental practice sale made in the tax year 2012–13, which ended on 5 April 2013, you should make a claim for Entrepreneurs’ Relief before the end of January 2015.
Husbands, wives, or civil partners are regarded as being separate individuals for the purpose of claiming Entrepreneurs’ Relief and may make each individual claims up to the maximum lifetime allowance which is £10 million for dental practice sales which take place on or after 6 April 2011.
How much is the reduction to Capital Gains Tax with Entrepreneurs’ Relief When I Sell My Dental Practice?
For dental practice sales made on or after the 23rd June 2010 the capital gain will be subject to Capital Gains tax at a rate of 10%, as opposed to the regular rate of 18%. On a sale of several hundred thousand pounds this saving can be very significant and is well worth applying for.
You are subject to a lifetime limit on claiming Entrepreneurs Relief as stated above and if you were to make several dental practice sales during your lifetime then any excess over and above the £10 million limit would be taxable at the normal Capital Gains Tax rate that was applicable at the time of the sale.
As with any major asset disposal, you are advised to take the advice of an experienced professional advisor when making decisions like these and there are specialist dental practice sales agencies who will value your practice, advertise and carry out the sale and deal with all of the financial aspects for you.
I’m selling my dental practice in order to buy a new one
If you were to sell your dental practice in order to fund, or part fund, the purchase of a new one then Entrepreneurs Relief might not be appropriate. Instead, you may wish to take advantage of a different scheme known as Business Asset Roll-Over Relief.
This benefit applies when you dispose of a dental practice or other business asset but intend to replace it with another. In such cases you may be able to effectively 'roll-over' or postpone the payment of any Capital Gains Tax that would usually have accrued on the proceeds of the sale.
How can I be sure of making the right decision when I sell my dental practice?
It is very important that you deal with professional dental practice sales agencies that are used to carrying out this type of transaction.
When you start thinking “how can I sell my dental practice and realise the maximum financial gain?” or “what’s the best way to sell my dental practice and purchase a larger one?” make sure that you speak to one of the above mentioned specialists and investigate all of the options open to you.
These professionals handle dental practice sales all of the time and are well versed in ensuring that you get the maximum return for your hard work in building up your business.
Selling a dental practice is an important decision.
The UK government is making it more attractive to sell a dental practice or other business by reducing the amount of Capital Gains Tax you may have to pay but you should always seek professional advice to make sure that your dental practice is properly valued and marketed when you come to sell.