18 December 2009
Equity release through value freeze
Shareholders looking to extract cash from their business (either now or later) can do so in a tax efficient manner at between 0% and 18%. This also provides opportunities to incentivise and retain employees with share ownership at little or no cost to the company or themselves and without the employees suffering the significant tax costs usually associated with direct acquisitions of shares.
Through this the business can reduce reliance on cash incentive structures, helping cash flow and building shareholder value to present the business in the best profile for a future transaction, such as a sale or flotation.
With the Budget announcement of a 50p tax rate, an increase in national insurance contributions and reduction of personal allowances for high earners, there has not been a more opportune time in recent history to recognise returns in the form of capital gains where possible. The squeeze on taxation policy would suggest this opportunity will have a limited shelf life.
We have successfully worked with clients on Equity Release schemes. For further information please contact Nick Byfield (01491 634436) or Doug MacLeod (01491 634433).