Buy a business
The UK has always been an attractive investment destination. One of the most common investments is buying an existing business. As the country has a very developed small and medium business sector, a potential investor has a wide choice of attractive options.
An existing business is a profitable investment.
Acquiring an existing business in England is easier than starting it from scratch and investing a lot of time and efforts in setting up and launching a business that would meet your needs. You get a business that has been running before you and all the processes are already in place. The company will have taken its share of the market, had its own client base, profit and reputation provided you make the right choice.
Existing businesses have business plans, they have done marketing researches and resolved many issues. You can always buy a neglected and unkept business and invest into its development and growth. If you are a novice in these matters, remember to ask the owner why they decided to sell the business in the first place; otherwise instead of a profitable business you might get a bunch of problems.
How to buy a business
If you want to buy a UK company, you can do it by purchasing stocks of the owning company or buying the business itself as a going concern. In the first case, you need to have a professional prepare a share purchase agreement and other documents confirming the share transfer. In the second case, another purchase agreement is prepared for acquiring business as well as lease or freehold transfer. Irrespective of the option you choose you must do financial and legal checks on the company.
Business and taxes
When you decide to buy a business or a company in the UK than owns a business, you need to always remember about taxes. When you buy a business you just need to choose assets and property of the company you intend to buy, equipment, land, tooling, cars, etc. The following taxes must be taken into consideration when buying a business in the UK:
- Stamp Duty Land Tax (SDLT). You must pay SDLT on increasing portions of the property or land price above a fixed non-taxable threshold. The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential land and properties. Rates are different when you’re buying your first home.
- The sale or lease of commercial property is generally exempt from VAT. However, there are exceptions to this rule and, besides, owners can opt to charge VAT when selling or leasing their property. If a commercial property transaction ca be classed as a transfer of going concern, no VAT is payable.
When you purchase shares in the owning company, the business is still managed and run by that company. It means there is no transfer of ownership, the business only gets a new director, shareholder and beneficiary. When you buy shares, you usually pay a tax or duty of 0.5% on the transaction. You pay tax on the price you pay for the shares, even if their actual market value is much higher. If you buy shares electronically, you’ll pay Stamp Duty Reserve Tax (SDRT), if you buy shares using a stock transfer form, you’ll pay Stamp Duty if the transaction is over £1,000.
There are many more things to consider when you buy a business in England. You have to make sure you don’t neglect them and the best thing an investor can do is to get expert advice. That’s where we can help.
Buying a business with Imperial & Legal
Our specialists are always here to help you choose an interesting project. Whether it is a traditional retail, e.g. a pub, car wash or cutting-edge production, or a financial company, we can find attractive offers, a business valuator and provide conveyancers.
Special attention shall be given to finding a business for the Tier 1 (Entrepreneur) visa. There are limitations for the type of business when applying for that visa. Besides, not all invested money can be considered an investment for immigration purposes. We at Imperial & Legal will be more than happy to assist our clients in finding a suitable business and closing a deal in the right way.
To discuss your requirements, please contact our specialists or call us on +44 (0)203 490 41 21.