TAX TIP OF THE WEEK - Are you planning to buy out your business partner and co-director in the near future? Make sure you do so tax efficiently

Are you planning to eventually buy out your business partner and co-director? Make sure you do so tax efficiently..

So you have agreed a fair price, the trouble is you now need to find the cash to pay them.

Assuming you don’t have the spare funds lying around you may need to secure a loan to finance the purchase, however, this will mean servicing the loan will come out of post-taxed income.

A more tax-efficient way of structuring this could be via a company buy-back. This is where the company uses its accumulated profits to pay off the outgoing director in exchange for their shares, meaning 100% of the company if left to you.

Not only will you not need to find funding for the buy-out, but it means you don’t need to pay a penny of tax in the deal.

Hope this was helpful, for lots more tax tips and strategies get a copy of our 71 ways to save tax checklist