The United Kingdom has always been an attractive investment destination. One of the most common ways to invest funds is to purchase an existing enterprise. Thanks to the country having a very developed small and medium business sector, a potential investor has a wide choice of attractive options.
If you want to buy a UK-based 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.
Acquiring an established entity in England is easier than starting one from scratch and investing a lot of time and effort in setting up and launching a business that would answer your expectations. You get a company that has been running for some time and all the processes are already in place. It will have taken its share of the market, had its own client base, profit and reputation, provided you make the right choice.
Existing entities have business plans, have done marketing researches and already resolved many issues. You can always buy a neglected and unkept company 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 company in the first place; otherwise instead of a profitable business you might get a bunch of problems.
When buying a business or an owning company in the UK, you need to always remember about taxes. You will 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 acquiring a business in the UK.
You must pay SDLT on increasing portions of the property or land price above a fixed non-taxable threshold. The current 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 it when selling or leasing their real estate. 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. You usually pay a tax or duty of 0.5% on the transaction. You pay tax on the purchase price of the shares, even if their actual market value is much higher. If you buy them electronically, you’ll pay Stamp Duty Reserve Tax (SDRT), if you use a stock transfer form, you’ll pay Stamp Duty on any transaction over £1,000.
There are many more things to consider when buying an enterprise in England. Make sure you don’t neglect them by getting expert advice. That’s where we can help.
Our specialists are always here to help you choose a beneficial and profitable 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 valuator and provide conveyancers.
Special attention shall be given to finding a business for the UK Innovator visa. There are limitations for its type 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 you in finding a suitable project and closing a deal in the right and due manner.
We know where to start, how to comply with all legal and tax requirements and use your money in a most efficient manner. Contact us today.
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