web development slot pragmatic can be a sought-after skill, which can open the door to many opportunities for earning money. However, being a web developer can be stressful and demanding particularly when you are required to meet deadlines, complex projects, and demanding clients. If you’re trying to diversify your sources of income and decrease your dependence on active income, you might think about pursuing passive income.

Top Passive Income Ideas for Web Developers

Passive income can be a great way for web developers to generate additional revenue streams without constant active effort.

Start a SAAS Product Developer Business

A SaaS solution could be an ideal method for Web developers to earn regular income. It is possible to build a large customer base and earn a steady revenue from membership fees by creating a solution that addresses the same issue that is common to other companies. After your product has been developed and launched, it will continue to earn money without needing an ongoing effort and allow you to focus on other business tasks.

Start an Affiliate Marketing

You can earn money by making use of affiliate marketing to promote the services or products of other individuals. Each time a purchase is made using your affiliate link, you’ll earn a commission. Your expertise can be utilized as a web designer to create content that draws people to your site and promotes the products that you’re associated with. When your content is finished you can then be able to generate passive income.

Also read: Top 15 Unique Website Ideas

Start an Online Jewelry Store

It is possible to sell your items to a huge client base and earn income from passive sources by setting up an online jewelry store. An appealing and user-friendly online store that showcases your items can be built with your skills as a web designer. After your store is set up, it can continue running and earning revenue without requiring an endless amount of work.

Start a Content Writing Company

As a web developer, starting a content writing business could be an excellent option to earn a passive income. It is possible to delegate work and focus on business growth while also earning a share of the profits by hiring additional editors and writers. If your team is on the job the business will continue to earn money with no direct involvement, which gives you the opportunity to move to other tasks.

Start a Subscription Box Business

Customers who subscribe to receive a particular set of products every month from a subscription-box business. Because customers love getting a variety of items from different brands Subscription boxes are in fashion in the present.

Sell Digital Products

Digital assets, such as stock images and 3D models are developed and sold by web developers. Digital assets are easy to use and could generate earnings for many years. The most highly rated items are those that can be made digital. They are easy to create and share and are a great way to increase your business.

Start a Tech Blog

Blogging has become an income-generating venture for those with the appropriate expertise and who are able to effectively communicate with their readers. Through sharing useful information bloggers are able to earn money through a variety of ways, including affiliate marketing sponsorships or Google Ads.

Start A WordPress Template Business

Web developers are able to design templates for their websites and sell them on marketplaces for digital goods like ThemeForest. After a template has been created it can be used to continue earning revenue without any additional effort from the designer.

Also read: Top 30 Money Making Apps for Extra Income

Start A Website Hosting Platform

Web developers are able to offer website hosting services to their customers or offer hosting packages for sale on websites. Hosting could be a lucrative passive income stream because customers regularly pay to host services.

Start an Etsy shop

Etsy is a popular platform for artists to sell their products and web designers are able to profit from this opportunity by creating a visually appealing and user-friendly shop. After you’ve established your shop, you’ll be able to create multiple passive income streams by implementing actions like refining the product listing, using social media to promote the shop, and collaborating with influencers to enhance its visibility.

Final Word

Web developers can generate passive income through digital products, affiliate marketing, ad revenue, mobile apps, online courses, and more. Diversifying income streams can lead to financial stability and growth.

When people think about UK tax, they often assume it all comes down to where they live. If they’ve moved abroad, they assume they’re no longer taxable in the UK. If they’ve moved here, they expect to pay UK tax on everything from day one.

The reality is much more nuanced.

Before you can work out what tax you pay, the first question is whether you’re actually UK tax resident. It sounds like a simple question, but the answer isn’t always obvious.

Whether you’re relocating to the UK, emigrating overseas, splitting your time between countries or working internationally, understanding your residence status is one of the most important starting points in determining your UK tax position.

What does UK tax residence actually mean?

Your residence status determines how the UK taxes your income and capital gains for a particular tax year.

In general terms, if you’re UK tax resident, you’ll usually be taxed on your worldwide income and gains. If you’re not UK resident, you’ll normally only pay UK tax on certain UK-source income and gains.

Of course, there are exceptions and reliefs available, particularly where international tax rules or the new Foreign Income and Gains (FIG) regime apply, but residence is always the first question that needs answering.

It’s not simply about where you live

One of the biggest myths we hear is that spending fewer than 183 days in the UK automatically means you’re not UK resident.

Whilst the 183-day rule is certainly relevant, it is only one part of a much wider set of rules.

HMRC considers a range of factors, including how much time you spend in the UK, where you work, whether you have accommodation available and what connections (known as “ties”) you have to the UK.

This means two people spending exactly the same number of days here can have completely different residence positions.

We’ll explore exactly how those rules work in our next article on the Statutory Residence Test.

Where does domicile fit in?

Residence and domicile are often mentioned together, but they are separate concepts.

Historically, domicile played a significant role in determining how foreign income and gains were taxed in the UK through the remittance basis.

However, following the introduction of the new FIG regime, domicile is no longer the key determining factor for income tax and capital gains tax.

That said, domicile hasn’t disappeared completely. It can still be relevant for certain areas of UK taxation, particularly inheritance tax, so it’s important not to overlook it.

Why getting your residence status right matters

Your residence position can affect far more than simply whether you complete a UK tax return.

It may determine:

• whether your overseas income is taxable in the UK;
• whether foreign capital gains need to be reported;
• whether you qualify for relief under the FIG regime;
• whether a double tax treaty applies; and
• what reporting obligations you have to HMRC.

Getting it wrong can result in unexpected tax liabilities, missed reliefs or unnecessary reporting obligations.

A practical example

Imagine Joshua accepts a new role in London and moves from New Zealand in October.

He assumes he won’t become UK tax resident until the following tax year because he arrived halfway through the year.

In reality, depending on his circumstances, he could become UK resident during that same tax year. Equally, someone leaving the UK isn’t automatically non-resident simply because they’ve boarded a plane.

Every case depends on the facts, which is why understanding the rules is so important.

Final thoughts

Residence is one of the fundamental building blocks of the UK tax system. Before considering reliefs, exemptions or planning opportunities, you first need to establish whether you’re UK tax resident in the first place.

Once that has been determined, the rest of your UK tax position becomes much clearer.

Next Steps

Need advice on your UK residence or international tax position? Get in touch with ETC Tax and our specialist team will be happy to help.

The 2025/26 tax year is the first year in which taxpayers may find themselves dealing with with the new foreign income and gains (“FIG”) regime as part of their Self Assessment tax return.

For internationally mobile individuals, this is a significant change.

The old remittance basis came to an end on 5 April 2025 and has been replaced by a residence-based regime. As a general rule, UK residents are subject to UK tax on their worldwide income and gains as they arise.

However, there is an important exception. Individuals who are within their first four years of UK residence, following at least 10 consecutive years of non-UK residence, may be able to claim relief from UK tax on qualifying foreign income and gains.

On the face of it, that might sound relatively straightforward: establish whether you qualify and, if you do, claim the relief.

Unfortunately, as is often the case with tax, there is a little more to it than that.

The information reported, the claims made and the interaction with other allowances and reliefs can all affect the final tax position. With the first FIG tax returns now being prepared, we have set out 10 practical points worth thinking about.

1. First things first – do you actually qualify?

Before considering what foreign income and gains might qualify for relief, the starting point is your UK residence history

Broadly, the FIG regime can apply during an individual’s first four tax years of UK residence following at least 10 consecutive tax years of non-UK residence.

It is therefore important to establish exactly when you became UK resident and which year of the four-year FIG period you are currently in.

This may require a little more thought where you have previously spent time in the UK, moved in and out of the country or had a more complicated residence position in earlier years. Getting this first step wrong can affect everything that follows.

2. Just because you can make a FIG claim does not always mean you should

FIG relief can clearly be valuable, but the decision should not be made in isolation.

Depending on your circumstances, making a FIG claim or Overseas Workday Relief election can affect your entitlement to certain UK allowances and reliefs, including the personal allowance and Capital Gains Tax annual exempt amount.

This means there can be a trade-off.

Where you have a substantial amount of qualifying foreign income or gains, the benefit of the FIG claim may comfortably outweigh the allowances lost. Where the overseas amounts are relatively modest, however, that may not necessarily be the case.

It is therefore worth looking at the numbers before automatically making a claim.

3. You still need to know exactly what your foreign income and gains are

Whilst FIG relief can mean that you do not have to pay UK tax on certain foreign income and gains, unfortunately, it is not quite as simple as just claiming the relief and forgetting about them!

Under the new rules, you still need to work out exactly what foreign income and gains you have received during the tax year and which amounts qualify for relief.

It is also worth remembering that FIG relief is not one blanket claim covering everything overseas. Foreign income and gains are dealt with separately, and you will need to identify the relevant sources of income and gains you want to claim relief on.

So, even if you end up paying no UK tax on these amounts, there can still be quite a bit of work involved in getting everything together and making sure the correct claims are made.

4. Do not assume overseas reports use UK tax rules

If you have investments overseas, you may receive an annual tax statement, investment report or broker summary setting out your income and gains.

That is certainly a useful starting point, but it should not automatically be assumed that those figures can simply be copied into a UK tax return.

Different countries calculate taxable income and gains in different ways. The UK has its own rules, including specific rules governing how shares are matched on disposal and the operation of share pooling.

As a result, a gain calculated by an overseas broker for local tax purposes may not be the same gain that needs to be considered for UK tax purposes.

Overseas reports are useful evidence, but they may still need some UK tax analysis behind them.

5. Check the dates – the UK tax year may not match your overseas statements

This sounds like a simple point, but it can cause a surprising amount of difficulty.

The UK tax year runs from 6 April to 5 April. Many overseas banks, investment managers and tax authorities instead work on a calendar year ending 31 December.

A statement for the year ended 31 December 2025 therefore does not neatly correspond with the 2025/26 UK tax year.

Transactions and income may need to be apportioned between reporting periods to establish exactly what falls into the UK tax year.

So, before relying on an annual statement, check exactly what period it covers.

6. Already paid overseas tax? Don’t automatically assume FIG relief is best

Foreign income or gains may already have suffered tax in another country.

Ordinarily, Foreign Tax Credit Relief may be available to reduce the risk of the same income or gain being taxed twice. However, FIG relief and Foreign Tax Credit Relief cannot generally both be claimed on the same amount.

If FIG relief means there is no UK tax on a particular amount, there is no UK liability against which the corresponding foreign tax can be credited.

Where significant overseas tax has already been paid, it can therefore be worth comparing the alternatives.

Again, this comes back to looking at the overall tax position rather than simply making a FIG claim because it is available.

7. Former remittance basis users should not forget historic funds

The remittance basis may have gone, but that does not mean historic foreign income and gains accumulated under the old rules can simply be forgotten about.

Former remittance basis users may still have overseas bank accounts or investment portfolios containing pre-6 April 2025 foreign income and gains.

Understanding what those funds represent – and keeping the records to support that position – remains important.

There is also the Temporary Repatriation Facility (“TRF”) to consider. This may allow eligible former remittance basis users to designate qualifying pre-6 April 2025 foreign income and gains at reduced tax rates.

The TRF is available during the 2025/26, 2026/27 and 2027/28 tax years, so the first FIG tax return can also be a useful prompt to revisit historic overseas funds and consider whether any wider planning is appropriate.

8. Working overseas? Don’t forget Overseas Workday Relief

For individuals who have recently arrived in the UK but continue to spend part of their working time overseas, Overseas Workday Relief (“OWR”) is another important consideration.

The rules changed significantly from 6 April 2025.

Under the new regime, OWR is linked to qualifying residence under the FIG rules and is subject to an annual financial limit. Broadly, relief is restricted to the lower of £300,000 and 30% of the relevant qualifying employment income.

Things can become more complicated where remuneration includes bonuses, share awards or other deferred payments relating to duties performed across more than one tax year.

In these cases, the timing of the remuneration and the distinction between making an OWR election and claiming relief for particular income can become particularly important.

9. Don’t leave the overseas information until January

There is often a temptation with Self Assessment to think about the tax return as the 31 January deadline approaches.

For individuals with overseas affairs, that can make life unnecessarily difficult.

Depending on your circumstances, you may need information covering overseas bank accounts, investment portfolios, rental properties, foreign tax paid, capital disposals, employment income and potentially historic remittance basis funds.

If that information is spread across several institutions, or several countries, gathering it can take time.

Once you have it, there may then be currency conversions, UK tax calculations and further analysis to undertake.

Starting early gives you time to work out what is missing, ask questions and resolve any uncertainties without the pressure of an approaching filing deadline.

10. Finally, don’t confuse the filing deadline with the FIG claim deadline

The normal online filing deadline for a 2025/26 Self Assessment tax return is 31 January 2027.

The statutory deadline for making a FIG relief claim for 2025/26 is, however, generally 31 January 2028, one year after the normal filing deadline. The same general time limit applies to OWR elections and claims.

That additional time can be useful where further information becomes available after the original return has been submitted, but it should not be seen as a reason to put off dealing with the position.

If additional taxable income is identified later, further tax and interest may still arise.

There is another reason the deadline matters. If additional foreign income or gains are discovered after the relevant claim deadline has passed, it may no longer be possible to claim FIG relief on those amounts, subject to limited exceptions.

In other words, good records from the outset are still very important.

Looking ahead

The move from the remittance basis to the FIG regime is a major change to the way internationally mobile individuals are taxed in the UK.

For qualifying new residents, the regime can be extremely valuable, potentially providing relief from UK tax on qualifying foreign income and gains during their first four years of UK residence.

But whether someone qualifies is only the beginning of the conversation.

Residence history, foreign tax, overseas investment reporting, UK allowances, historic funds and employment income can all affect the final position. In some cases, there will also be choices to make about which reliefs to claim and when.

With 2025/26 being the first tax return filing season under the new rules, now is a good time to start gathering the relevant information and understanding how the regime applies to your circumstances.

Doing that work early should make the first FIG tax return considerably easier and, importantly, help make sure valuable reliefs or planning opportunities are not missed.

Next Steps

Preparing for your first tax return under the FIG regime then send ETC a message and let us guide you.

What do the VAT rules say?

When a VAT dispute with HMRC begins, attention naturally turns to the technical position: What do the VAT rules say, and why is our interpretation correct?

But having a strong technical argument is only part of the picture. If the dispute progresses, being able to evidence the facts behind that argument can become just as important.

That is why, when dealing with a material VAT dispute, it can be useful to create an evidence map at an early stage.

What is an evidence map?

An evidence map is essentially a working record that connects the key facts of your case with the evidence available to support them.

Start by asking:

What facts need to be established for our VAT position to succeed?

For each one, identify what will prove it. This might include:

• contracts and agreements;
• invoices and purchase records;
• VAT returns and accounting records;
• bank statements and payment information;
• emails and correspondence;
• system or transaction data; or
• evidence from individuals involved in the transactions.

For example, if the VAT treatment depends upon the nature of a particular supply, don’t simply record what the business says happened. Consider what contemporaneous documentation demonstrates how the transaction actually operated in practice.

Find the gaps early

Once the available evidence has been mapped against the facts, gaps often become much easier to spot.

Perhaps an agreement cannot be located. Maybe historic bank statements need to be obtained. There could be discrepancies between transaction data and the VAT returns originally submitted.

Identifying those issues early gives the business and its advisers an opportunity to address them while information is still relatively accessible.

It can also be helpful to allocate responsibility for each missing item and keep a record of what has been requested and received.

Make sure the numbers tell the same story

Where the taxpayer is putting forward an alternative VAT calculation, that calculation should also be reconciled back to the underlying records.

Can the figures be traced through to the VAT returns? Do they agree with the accounts and transaction data? Can any differences be clearly explained?

A calculation may appear perfectly reasonable in isolation, but inconsistencies with previously submitted returns or accounting records could raise further questions from HMRC.

Don’t leave evidence gathering until the end

One of the risks in a long-running dispute is assuming the supporting documents can simply be gathered later if they are needed.

By then, records may be harder to find, staff involved in the transactions may have left the business and historic data may no longer be readily accessible.

More importantly, if the dispute reaches the First-tier Tribunal, there may not be another opportunity to rebuild the evidential case later.

A recent VAT case provides a useful example.

Massala Exotic Limited and Khosru Miah v HMRC – the importance of getting the evidence right first time

Massala Exotic Limited and Khosru Miah v HMRC [2026] UKUT 00355 (TCC) concerned an Indian restaurant which HMRC believed had underdeclared its takings.

HMRC raised a best-judgment VAT assessment of £280,903 covering VAT periods from September 2013 to September 2019.

It also imposed a deliberate penalty of £176,966.37, representing 63% of the VAT assessed, and issued a personal liability notice to the company’s director, Mr Miah.

The First-tier Tribunal upheld HMRC’s assessment, penalty and personal liability notice.

How had HMRC calculated the VAT?

For earlier periods, HMRC had merchant-acquirer information showing card receipts. Equivalent information was not available for the later periods after June 2016, so HMRC used the last evidenced expected gross-sales figure of £240,780.56 and repeated it for each subsequent quarter up to September 2019. This resulted in the same quarterly VAT assessment of £11,236.43 being applied for approximately three years. The taxpayer argued that this failed to reflect factors including seasonality, changing trading conditions, declining sales and the restaurant’s eventual closure.

However, criticising HMRC’s methodology was not enough. The Upper Tribunal found no arguable error of law in the FTT’s conclusion that HMRC’s assessment had been made to best judgment.

If turnover fell, where is the evidence?

This is where the case becomes particularly relevant for businesses involved in VAT disputes. The taxpayers’ position was that turnover had declined. However, documentary evidence had not been produced before the FTT to demonstrate that decline or show how turnover had varied after 2016.

Had the business been able to produce a stronger evidential picture, relevant records might have included:

• merchant-acquirer and bank statements;
• till or EPOS reports;
• online delivery platform records;
• evidence of closures or reduced opening hours;
• staffing records demonstrating reduced trading capacity;
• pricing or menu changes;
• management accounts and forecasts; and
• an alternative period-by-period turnover calculation.

The important point is that saying “HMRC’s estimate doesn’t reflect what actually happened” is very different from being able to demonstrate, with evidence, what actually happened.

You may only get one proper opportunity to produce the evidence. The case also illustrates the danger of trying to fill evidential gaps after the FTT has reached its decision.

Mr Miah subsequently sought to introduce additional material, including bank statements and a witness statement concerning the card-machine arrangements.

The Upper Tribunal refused to admit the fresh evidence.  The taxpayers had already been made aware during the FTT proceedings that documentary and witness evidence was lacking. There had been an opportunity to provide that material at the appropriate stage.

The position regarding the bank statements was particularly instructive. Replacement statements could potentially have been obtained from the bank. If relevant documents were held by HMRC, steps could have been taken before the FTT to seek their disclosure.

Those opportunities had not been pursued in time.

An appeal to the Upper Tribunal is generally concerned with whether the FTT made an error of law. It is not ordinarily an opportunity to rerun the factual case with better evidence after discovering why the original case failed.

That makes the practical lesson particularly important: Treat the FTT as the point at which your factual case needs to be properly evidenced. Don’t assume there will be an opportunity to fill the gaps later.

What should you take from the case?

Before a VAT dispute reaches a hearing, work through the factual case systematically.

Ask:

What does the Tribunal need to accept for our argument to succeed?

Then, for every important factual proposition, ask:

What document, data or witness proves it?

If the argument is that turnover declined, quantify the decline and produce records supporting it. If transactions recorded through a particular card machine belonged to another business, establish the merchant arrangements, follow the money through the bank accounts and demonstrate the accounting treatment.

If HMRC’s calculation is said to be wrong, don’t stop at identifying weaknesses in HMRC’s methodology. Where possible, produce a credible, evidence-backed alternative calculation.

A technical argument or carefully drafted submission cannot necessarily compensate for missing factual evidence.

Good evidence management isn’t just for tribunal cases

Of course, most VAT disputes will not necessarily end up before a tribunal.

But that does not make early evidence gathering any less valuable.

Organising the evidence from the beginning can help businesses and their advisers:

• understand the strengths and weaknesses of their position;
• identify missing information before it becomes difficult to obtain;
• respond more effectively to HMRC;
• challenge HMRC calculations with evidence rather than assertions; and
• potentially resolve a dispute before tribunal proceedings become necessary.

The practical takeaway

When a significant VAT dispute begins, don’t wait to see how far HMRC takes it before thinking about evidence.

• Establish the facts you need to prove.
• Identify the evidence supporting each one.
• Find the gaps.
• Make sure the numbers reconcile.
• And do it early.

The decision in Massala Exotic Limited and Khosru Miah v HMRC is a useful reminder of why this matters.

When it comes to an HMRC VAT dispute, knowing your VAT position is important. But being able to prove the facts supporting that position at the right time can be just as important.

Next Steps

If you are wanting support with VAT rules then please contact ETC Tax.

Over the last twelve months, we have seen a significant increase in the number of business owners wanting to talk about exit planning.

Some are actively considering a sale within the next two to five years. Others have no immediate plans to exit but recognise that retirement, succession, ill-health, changing market conditions, or simply a desire to do something different may mean they need options in the future.

What is interesting is that the conversations are rarely just about tax.

Instead, they tend to focus on broader questions:

• What is my business worth?
• Could it operate without me?
• Who might buy it?
• Are my management team ready?
• Will I have enough to retire?
• How do I protect my family and wealth after a sale?

The most successful exits are rarely created during a transaction process. They are usually the result of years of preparation.

Most business owners spend years growing their business but surprisingly little time preparing to leave it. The reality is that purchasers pay for businesses that can succeed without the owner. A well-planned exit is therefore about much more than tax planning (yes, really!) or finding a buyer. It is about building a business that somebody else wants to own.

With that in mind, here are ten areas every business owner should be thinking about long before a sale process begins.

1. What Does a Successful Exit Actually Look Like?

Many owners say they want to sell in two or three years, but when asked what success looks like, the answer is often less clear.

Do you want:

• Complete retirement?
• Ongoing involvement?
• A minority shareholding?
• An earn-out?
• Immediate cash?

The answers will influence almost every decision that follows.

A successful exit starts with clearly defining your personal and financial objectives before considering transaction structures or tax planning.

2. Can the Business Survive Without You?

This is often the most important question.

If key decisions always come back to the owner, buyers will see risk.

One of the recurring themes in our recent client discussions has been the effort involved in making a business less dependent on its founder by building a management team capable of running the business independently.

Ask yourself:

• Who would run the business tomorrow if you disappeared for six months?
• Who takes key customer decisions?
• Who controls operations?
• Who manages finance?

The less dependent the business is on you personally, the more attractive it becomes.

3. Do You Understand What Drives Value?

Many owners focus on turnover.

Buyers rarely do.

Instead, they focus on:

• Sustainable profits
• Quality of earnings
• Growth potential
• Customer concentration
• Management strength
• Market position

A valuation exercise can provide valuable insight long before a transaction is contemplated because it helps identify what creates value and what destroys it.

4. Is Your Structure Fit for Purpose?

Businesses evolve.

Structures that made sense ten years ago may not make sense today.

We regularly see:

• Holding companies
• Overseas subsidiaries
• Legacy entities
• Historic share arrangements
• Employee ownership structures
• Pension arrangements

All of which may affect a future sale.

Identifying structural issues early gives time to consider alternatives and avoids unpleasant surprises during due diligence.

5. Have You Considered How a Buyer Will Want to Acquire the Business?

Owners often assume a sale is a sale. It isn’t.

A buyer may prefer:

• A share acquisition
• An asset acquisition
• A partial acquisition
• Deferred consideration

The tax and commercial consequences can be very different.

Understanding likely purchaser preferences early can help shape planning decisions and manage expectations.

6. Are Key People Properly Incentivised?

Many businesses rely heavily on a small number of senior employees or directors.

A buyer will want confidence that those people remain after completion.

Questions worth considering include:

• Who are the key people?
• What motivates them?
• What happens if they leave?
• Should they participate in a future sale?

The right incentive arrangements can protect value and improve saleability.

7. Have You Thought Beyond the Transaction?

Selling your business is a major event.

What happens afterwards?

Many owners focus entirely on the deal itself and spend too little time considering:

• Future lifestyle
• Retirement income
• Succession
• Wealth preservation

These issues are often more important than the transaction itself.

8. Is Your Pension Strategy Aligned With Your Exit Strategy?

For many business owners, pensions represent a significant proportion of their overall wealth.

Pensions, SSAS arrangements and other investment structures should not be considered in isolation. They should form part of a coordinated plan alongside the proposed disposal and wider family objectives.

9. Have You Considered All Possible Exit Routes?

A trade sale is not the only option of course.

Depending on the circumstances, alternatives may include:

• A management buyout
• An Employee Ownership Trust (EOT)
• Family succession
• A phased disposal
• A combination of these approaches

Different routes produce different outcomes in terms of tax, cash flow, control and risk.

10. Are You Starting Early Enough?

Perhaps the biggest lesson from our recent discussions with business owners is that good exits are rarely created in six months.

The most successful exits are often the result of years of preparation.

Time allows owners to:

• Improve profitability
• Strengthen management teams
• Resolve structural issues
• Optimise tax positions
• Reduce risk
• Build buyer confidence

The earlier the planning starts, the more options are available.

Final Thought

Business owners frequently ask:

“When should I start planning my exit?”

The honest answer is that if you think you might sell within the next five years, you should probably start now.

The best time to address tax, structure, management succession and personal wealth planning is when there is no immediate pressure to complete a transaction. By the time a buyer appears, many of the most valuable planning opportunities may already have passed.

How ETC Tax Can Help

Exit planning is rarely a single piece of work. It is usually a combination of commercial, tax, succession and personal planning considerations that need to be aligned long before a transaction takes place.

At ETC Tax, we regularly help business owners with:

• Exit readiness reviews
• Business valuations
• Shareholder and group restructuring
• Growth share and management incentive planning
• Employee Ownership Trust (EOT) advice
• Family succession planning
• Management buyouts
• Pre-sale tax planning
• Pension and family wealth planning
• Transaction support alongside solicitors, corporate finance advisers and accountants

Every business and every business owner is different. The best exit strategy is rarely about a particular tax relief or transaction structure. Instead, it is about understanding your objectives, identifying opportunities and risks early, and putting a plan in place that allows you to leave the business on your own terms.

Thinking about an exit in the next five years?

Whether you are considering a trade sale, management buyout, Employee Ownership Trust, family succession or simply want to understand what your business may be worth, an early conversation can often identify planning opportunities that may not be available closer to a transaction.

Contact the ETC Tax team on 0161 711 1320 or [email protected] or click here .

Budget Rumours? Don’t Let the Tax Tail Wag the Dog

No exit planning article would be complete without mentioning the perennial rumour mill surrounding the possible changes to Capital Gains Tax on 28^th October.

Whenever speculation emerges about potential changes to Capital Gains Tax, Business Asset Disposal Relief or other reliefs, business owners understandably start to wonder whether they should accelerate their plans.

Whilst future tax changes are always possible, it is important not to lose sight of the bigger picture.

Tax matters. We would be the last people to suggest otherwise.

However, the most successful exits are usually built on good business planning first and tax planning second. Don’t let concerns about what might happen in the next Budget distract you from the things that will genuinely drive value over the next five years.

Contact the team at ETC Tax to discuss you exit plans.

Selling a company is one of the most important financial decisions a business owner will make. While attention is often focused on finding the right buyer and negotiating a strong sale price, the tax consequences can significantly affect the amount ultimately retained from the transaction. Decisions made months or even years before a sale can affect available reliefs, tax liabilities, and the overall outcome.

Effective business exit tax planning involves more than calculating a potential tax bill. It means reviewing ownership structures, understanding available reliefs, assessing company assets, and identifying potential risks before negotiations begin. Taking action early can provide greater flexibility and help business owners approach a sale with confidence.

Table of Contents

Why Tax Planning Should Start Before a Sale

Many business owners only begin thinking about tax once a buyer has been identified. By that stage, some planning opportunities may no longer be available.

Certain tax reliefs depend on conditions being met for a specific period before a sale takes place. Ownership structures, shareholdings, and company activities may all influence the tax treatment of a future transaction. Starting the planning process early allows business owners to review these areas and make informed decisions before entering negotiations.

Early planning can help:

• Identify potential tax liabilities
• Assess eligibility for tax reliefs
• Review ownership structures
• Prepare for buyer due diligence
• Reduce the risk of unexpected tax issues

It can also provide a clearer picture of what the business owner is likely to retain after the sale has completed.

Businesses considering a future exit may benefit from ETC Tax’s Corporate Business Tax services, which support tax planning around significant business transactions.

Taxes to Consider Before Selling Your Company

One of the first steps in business exit tax planning is understanding which taxes may apply.

In many cases, company owners selling shares will need to consider Capital Gains Tax. The gain is generally calculated based on the difference between the sale proceeds and the cost of acquiring the shares. Depending on the circumstances, reliefs and allowances may affect the final liability.

According to HMRC, Capital Gains Tax may apply when assets or shares are disposed of at a profit.

The structure of the transaction can also influence the tax outcome. For example, a share sale may have different tax implications from an asset sale. The number of shareholders involved, deferred consideration arrangements, and historic company transactions may also affect the position.

Understanding these factors before a sale can help business owners avoid unexpected tax consequences and make better-informed decisions during negotiations.

Business Asset Disposal Relief and Company Sales

Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief, is often one of the most valuable reliefs available to business owners.

Where the qualifying conditions are met, the relief can reduce the amount of Capital Gains Tax payable on eligible gains. However, eligibility is not automatic, and many business owners are surprised to learn that ownership alone does not guarantee qualification.

Some of the possible considerations for eligibility include:

• The shareholder’s ownership interest and rights in the company.
• Whether he is an employee/director of the firm.
• Type of business being conducted by the company.
• How long the requirements have been fulfilled.

According to HMRC guidance, specific conditions must be satisfied before relief can be claimed.

A review before entering into a sale agreement can help identify any issues that may affect eligibility and provide time to address them if necessary.

Reviewing Your Shareholding Structure

The shares held by individuals can be very crucial when considering the tax implications of selling a business.

Most companies change. Additional stockholders might come in; family members could get shares of the stock, or employees could also have stocks. Even though all this might contribute to the success of a company, it can influence future tax considerations.

Areas worth reviewing include:

• Current ownership percentages.
• Different classes of shares.
• Historic share transfers.
• Family ownership arrangements.
• Employee share schemes.

For instance, a newly acquired share by a shareholder may not qualify for particular relief periods that are needed. Moreover, different types of shares may have an impact on the distribution of sale proceeds.

Understanding the ownership structure before negotiations begin can help avoid delays and identify planning opportunities.

Business owners considering a transaction may benefit from ETC Tax’s Buying or Selling a Company service, which focuses on the tax implications of company acquisitions and disposals.

Excess Cash and Investment Assets

Many organizations that are profitable tend to have quite a bit of cash as reserves. Some organizations will have investments and even properties other than their business operations.

While having such assets can improve the financial standing of the organization, it could bring about other concerns as well.

Potential buyers may assess trading activities differently from investment holdings. In addition, certain tax reliefs may depend on the company’s trading status and the nature of its activities.

For example, a company that generates a significant proportion of its income from investments may require a more detailed review than a business operating solely as a trading company.

The assessment of such assets before selling is necessary for the owners of the enterprise to be aware of any consequences.

Using Company Restructuring as Part of Exit Planning

In some cases, restructuring could be a component of an overall exit strategy.

This may include examining ownership structure, business separation, or preparing for a future sale. It must always be noted, however, that there will likely be tax implications in any change.

The suitability of a restructuring exercise depends on the specific circumstances of the business and its shareholders. What works well for one company may not be appropriate for another.

Business owners considering structural changes should understand the potential tax implications before proceeding. ETC Tax’s Reorganisations and Reconstructions service helps businesses review company structures and assess the tax consequences of proposed changes.

Common Tax Planning Mistakes Before a Sale

Many avoidable tax issues arise because planning starts too late. Common mistakes include:

Assuming tax planning can wait

Some business owners focus entirely on commercial negotiations and only consider tax implications once a deal is close to completion.

Failing to review relief eligibility

Tax reliefs often have specific qualifying conditions that should be reviewed well before a transaction takes place.

Overlooking historic ownership changes

Share transfers, family ownership arrangements, and employee share schemes can affect the tax outcome of a sale.

Ignoring non-trading assets

Investment assets and excess cash reserves may create additional considerations during a transaction.

Focusing only on company tax

A business sale often affects both corporate and personal tax positions. Reviewing both together can provide a clearer understanding of the overall outcome.

Addressing these issues early can help reduce uncertainty and support better decision-making throughout the sale process.

When to Seek Professional Advice

The most effective business exit tax planning often begins long before a company is placed on the market.

Business owners may benefit from advice when:

• Planning retirement.
• Considering a future sale.
• Bringing in investors.
• Restructuring ownership arrangements.
• Preparing succession plans.
• Reviewing available tax reliefs.

A company sale often affects both business and personal finances. Reviewing these areas together can help identify risks, opportunities, and planning considerations before a transaction takes place.

ETC Tax’s Corporate Business Tax services and Private Client Tax services support business owners throughout the planning process and help ensure tax considerations are addressed before key decisions are made.

Plan Before Selling Your Company

The best business exits always involve planning long before any buyer comes along. Spending some time assessing your tax situation, ownership structure, and future goals can actually help eliminate confusion and make your decisions easier when selling the business.

If you are considering selling your company, contact ETC Tax for advice tailored to your situation and future goals.

Frequently Asked Questions

How far in advance should I start business exit tax planning?

It is best if planning starts long before any sales become apparent. There will be more time to look at the structure of ownership, consider relief qualification, and identify any problems.

Will I automatically qualify for Business Asset Disposal Relief?

No. HMRC applies specific conditions relating to ownership, employment status, and the nature of the business. Eligibility should be reviewed before relying on the relief as part of your planning.

Can excess cash affect a company sale?

Possibly. Extra cash and investments could affect the buying party’s interest, the terms of the transaction, and the availability of some tax breaks. It is advisable to examine these assets prior to a sale.

Can company restructuring affect a future sale?

Yes. Changes to ownership structure or ownership percentages may affect the tax treatment of a future transaction, depending on the circumstances.

Can HMRC review the tax treatment of a company sale?

Yes. HMRC may review transactions and request supporting evidence where tax reliefs or significant gains are involved. Maintaining accurate records can help support the position taken.

Understanding the Tax Differences

If you’re preparing to sell your business, you’ll probably spend plenty of time discussing the purchase price, the completion date and the finer details of the deal. What often comes as a surprise is that how*the sale is structured can be just as important as how much you’re selling the business for.

One of the first questions that usually needs answering is whether the transaction will be a share sale or an asset sale.

While the difference may sound technical, it can have a significant impact on both the tax position and the commercial outcome for everyone involved. Understanding the distinction early on can help avoid unexpected surprises and ensure you’re in the strongest possible position before negotiations begin.

What Is a Share Sale?

In a share sale, the buyer acquires the shares in the company rather than the individual assets it owns.

From the seller’s perspective, this often provides a cleaner exit. Ownership of the company transfers to the buyer, along with its assets, liabilities, contracts and trading history, while you simply dispose of your shares.

For many owner-managed businesses, this is generally the preferred outcome because it can be more straightforward from a tax perspective and may allow the seller to benefit from Capital Gains Tax treatment, depending on their individual circumstances.

That said, buyers are effectively inheriting the company’s history. Understandably, they’ll want reassurance that there aren’t any unexpected tax liabilities or compliance issues waiting to emerge after completion. This is why tax due diligence plays such an important role in a share sale.

What Is an Asset Sale?

An asset sale works differently.

Rather than purchasing the company itself, the buyer selects the assets they want to acquire. This might include property, equipment, stock, intellectual property, customer contracts or goodwill, while the company itself remains with the seller.

From a buyer’s perspective, this can be an attractive option because it allows them to leave behind liabilities they don’t wish to inherit.

For the seller, however, the position can be more complicated. The company may first pay tax on the profit arising from the sale of its assets and, if the remaining proceeds are later extracted by the shareholders, there may be a further layer of tax to consider.

While this won’t always be the case, it does mean an asset sale can produce a very different overall tax outcome compared with a share sale.

Why Do Buyers and Sellers Often Want Different Things?

It’s not uncommon for buyers and sellers to have different preferences when it comes to the structure of a transaction.

A seller will often favour a share sale because it can provide a cleaner exit and may offer a more favourable tax outcome. A buyer, on the other hand, may prefer an asset sale as it can reduce the risk of inheriting historic liabilities and provide greater flexibility over exactly what they’re acquiring.

Neither approach is inherently right or wrong. The final structure is usually the result of commercial negotiations, tax considerations and the practical objectives of both parties.

It’s Not Just About Tax

While tax is undoubtedly an important consideration, it shouldn’t be the only factor influencing how a transaction is structured.

The legal position, financing arrangements, existing contracts, employee transfers, regulatory requirements and commercial objectives all need to be taken into account.

In many cases, achieving the best overall outcome involves balancing tax efficiency with commercial reality. A structure that looks attractive from a tax perspective may not always be practical, while the commercially preferred option may come with a different tax cost. The key is understanding those implications before heads of terms are agreed, not after.

Why Planning Ahead Makes a Difference

By the time a buyer has made an offer, both parties often have a preferred deal structure in mind.

If you only begin considering the tax consequences at that stage, your ability to influence the outcome may be limited. Seeking advice early allows you to understand the likely tax implications of different structures, identify potential issues before negotiations begin and approach discussions with confidence.

It also means you’re less likely to be caught off guard if a buyer proposes a structure that differs from your expectations.

The Bottom Line

There isn’t a one-size-fits-all answer when it comes to choosing between a share sale and an asset sale.

Every business, every buyer and every transaction is different. What matters is understanding the tax and commercial implications of each option before key decisions are made, rather than trying to deal with them once negotiations are well underway.

With the right planning and advice, you’ll be in a much stronger position to negotiate confidently, protect the value of your business and achieve an outcome that works for everyone involved.

Thinking About Selling Your Business?

If you’re considering selling your business, it’s never too early to start planning. Our tax specialists can help you understand the tax implications of different deal structures, identify planning opportunities and support you throughout the transaction process.

Get in touch with our team today to discuss your plans and find out how we can help you achieve a successful and tax-efficient business sale.

My Client is Returning to the UK After 12 Years Abroad – What Should We Do Before They Arrive?

Scenario

An accountant contacted ETC after hearing from a former client who was planning to return permanently to the UK after 12 years living and working overseas.

The client had originally left the UK for employment purposes but, during their time abroad, had built up a significant portfolio of overseas assets.

These included:

• an overseas investment portfolio worth approximately £1.2 million;
• cash deposits of approximately £300,000, generating around £12,000 a year in interest;
• an overseas rental property worth approximately £650,000, generating gross rents of around £30,000 a year; and
• shares in an overseas company which had increased significantly in value since acquisition.

The investment portfolio was also generating approximately £35,000 a year in dividends and other investment income.

In total, the client potentially had more than £75,000 of annual foreign income, as well as substantial unrealised gains within their overseas investments.

The client planned to return to the UK permanently during the 2026/27 tax year.

They approached their former accountant and asked what initially sounded like a relatively straightforward question:

“Is there anything I need to do about my overseas investments when I move back?”

The accountant recognised that the answer could have significant tax implications and contacted ETC before advising the client.

Issue

The first question was whether the client would become UK resident immediately on their return and whether split-year treatment could apply.

However, residence was only part of the picture.

Since 6 April 2025, the taxation of foreign income and gains for qualifying new UK residents has changed significantly.

The accountant therefore needed to establish whether the client could qualify for the four-year Foreign Income and Gains (FIG) regime.

Broadly, eligibility required looking at whether the individual had been non-UK resident for the necessary period before becoming UK resident.

With the client having spent 12 years overseas, there was potentially an opportunity to benefit from the FIG regime following their return.

But there were several further questions.

Would the client’s overseas rental profits fall within the regime?

What about the £35,000 of annual overseas investment income?

How would future gains on the £1.2 million investment portfolio be treated?

Would selling overseas investments before returning produce a different result from selling them afterwards?

And importantly, when exactly would the client’s four-year FIG window begin and end?

The accountant wanted to give the client a clear plan before they returned to the UK, rather than waiting until the first UK Self Assessment return was due.

How ETC Helped

ETC worked alongside the accountant to review the client’s residence history and overseas assets.

Step 1 – Reconstructing the Residence Position

We first reviewed the client’s UK residence position for the years before their return.

Rather than relying simply on the statement that the client had “lived abroad for 12 years”, we considered their circumstances under the relevant residence rules.

This included their time spent in the UK, accommodation, work patterns and other relevant connections.

This was important because FIG eligibility depends on the individual’s UK tax residence history, not simply where they regarded themselves as living.

Having established the residence history, we could consider whether the client met the conditions for the four-year FIG regime.

Step 2 – Establishing the Return Date

We then considered the client’s proposed return during 2026/27.

The accountant initially expected the client simply to become UK resident for the whole tax year.

However, we considered whether the circumstances could satisfy one of the statutory split-year cases.

Where split-year treatment applies, the tax year is divided into a UK and overseas part for certain purposes.

This allowed the accountant and client to understand precisely when the UK tax position would change.

It was also important to establish that a split year can still count as a year of UK residence for the four-year FIG period.

The client therefore couldn’t assume that a partial first year in the UK would give them four additional complete tax years of FIG treatment.

Step 3 – Reviewing the £2 Million+ Overseas Asset Portfolio

We then reviewed the client’s overseas assets individually rather than treating everything held abroad in the same way.

The portfolio included approximately:

£1.2 million – investments

£650,000 – overseas property

£300,000 – cash

This gave the client overseas assets worth approximately £2.15 million.

We considered the nature of the income and potential gains arising from each asset and how these could be treated once the client became a UK resident.

This was particularly important because the client was expecting approximately:

£35,000 – investment income

£30,000 – gross overseas rents

£12,000 – overseas interest

That represented around £77,000 of gross foreign income each year before considering any investment disposals or capital gains.

Step 4 – Looking at Unrealised Gains

One of the most important areas was the client’s investment portfolio.

Several investments had been acquired many years earlier and had increased substantially in value.

For example, one overseas shareholding had originally cost approximately £150,000 but was now worth around £400,000.

That represented an unrealised gain of approximately £250,000.

The client had been considering selling the shares but hadn’t decided whether to do so before or after returning to the UK.

ETC helped the accountant understand how the timing of disposals could interact with the client’s UK residence and potential FIG position.

Rather than making investment decisions purely on commercial grounds without considering UK tax, the client could now factor the tax consequences into their decision-making.

Step 5 – Creating a Four-Year Tax Roadmap

Having established that the client could potentially qualify for the FIG regime, we helped the accountant map out the client’s first four UK-resident tax years.

The purpose wasn’t simply to minimise the client’s tax in year one.

We wanted the accountant and client to understand what happened throughout the entire FIG period and, importantly, what would happen when it ended.

With more than £2 million of overseas assets, planning for year five could be just as important as planning for year one.

The roadmap therefore considered the expected foreign income, potential investment disposals and the future treatment of the overseas property.

This gave the accountant a framework they could use when advising the client each year.

Outcome

Instead of returning to the UK and addressing the tax consequences afterwards, the client had a clearer picture of their position before the move took place.

The accountant understood:

• when the client was expected to become UK resident;
• whether split-year treatment could apply;
• whether the client could qualify for the four-year FIG regime;
• when that four-year period would start and finish;
• how the client’s different sources of foreign income and gains needed to be considered;
• which transactions might warrant consideration before or during the FIG period; and
• what would change once the four-year FIG period came to an end.

The client could therefore make decisions about their £2.15 million overseas portfolio with a better understanding of the potential UK tax consequences.

Client Benefit

The client had spent more than a decade building wealth overseas and was returning to the UK with substantially more complex affairs than when they left.

What could easily have become a tax compliance exercise after their return instead became a pre-arrival tax planning exercise.

By taking advice before moving, the client had time to consider the timing of investment disposals, understand the treatment of their foreign income and plan for the transition into the UK tax system.

For the accountant, the case demonstrated that they didn’t need to refer away a long-standing client simply because their affairs had become internationally complex.

They retained the overall client relationship and continued to deal with the client’s ongoing accounts and tax compliance.

ETC was brought in specifically to provide the specialist UK tax residency advice needed to support them.

The accountant therefore had access to specialist expertise when they needed it, while remaining the client’s primary adviser.

Next Steps

Do you have a client returning to the UK after several years overseas?

The earlier their residence, foreign income and overseas assets are considered, the more opportunity there may be to plan before their UK tax position changes. Get in touch with ETC Tax.

Planning to Sell Your Business?

If you’re planning to sell your business, one of the first questions you’re likely to ask is, “How much tax will I have to pay?”

The answer will depend on a number of factors, but one relief that often comes into the conversation is Business Asset Disposal Relief (BADR). If you qualify, it can reduce the rate of Capital Gains Tax you pay on the sale of your business, potentially resulting in a significant tax saving.

However, despite its name, Business Asset Disposal Relief isn’t something that automatically applies simply because you’re selling a business. There are several conditions that need to be met, and it’s not uncommon for business owners to assume they qualify when, in reality, one or more of those conditions hasn’t been satisfied.

That’s why it’s so important to understand how the relief works before you agree a sale.

What is Business Asset Disposal Relief?

Business Asset Disposal Relief is a Capital Gains Tax relief designed to support business owners when they dispose of all or part of their business.

In simple terms, if you qualify, the gain arising on the sale may be taxed at a lower rate than would otherwise apply, subject to the relevant lifetime limit.

For many owners, this can make a considerable difference to the amount they ultimately receive from the sale, which is why confirming your eligibility should form part of your exit planning.

Who Can Qualify?

Business Asset Disposal Relief isn’t limited to one type of business owner.

Depending on your circumstances, it may be available to:

• Sole traders selling their business.
• Individuals disposing of an interest in a partnership.
• Shareholders selling shares in their personal company.

The qualifying conditions differ depending on the type of disposal, but one thing remains consistent; the relief is based on meeting specific criteria, not simply owning a business.

Understanding the Qualifying Conditions

While every situation is different, there are a number of key conditions that commonly need to be satisfied.

For example, where shares in a company are being sold, you will generally need to have held the shares for a minimum qualifying period, the company will usually need to be carrying on a trading activity rather than primarily holding investments, and you will normally need to have been an officer or employee of the company during the relevant period.

There are also minimum shareholding requirements that need to be considered.

Although these conditions may sound straightforward, the detail is often where complications arise. Small changes to ownership structures or historic transactions can sometimes affect eligibility without business owners realising.

Why It’s Worth Checking Early

One of the biggest misconceptions is that Business Asset Disposal Relief is something you look at once you’ve found a buyer.

In reality, that’s often too late.

Many of the conditions need to be satisfied for a qualifying period before the sale takes place, meaning opportunities to improve your position may no longer be available once negotiations have started.

Reviewing your eligibility well in advance gives you time to understand your position and, where appropriate, consider whether any planning can be undertaken before a transaction begins.

Common Reasons Business Owners Miss Out

Every business is different, but there are several situations we regularly see where business owners are surprised to discover they don’t qualify for relief.

This might be because ownership has changed over the years, the company no longer meets the definition of a trading company, shareholdings have been diluted following investment, or a previous reorganisation has unintentionally affected the qualifying conditions.

In other cases, owners simply assume they qualify without ever checking.

None of these situations necessarily mean relief is unavailable, but they do highlight why it’s important not to leave the review until the final stages of a transaction.

Every Sale Is Different

No two business sales are the same.

The availability of Business Asset Disposal Relief can be influenced by the structure of your business, your ownership history and the way the transaction is ultimately carried out.

That’s why it’s important to consider the relief as part of your wider exit strategy rather than viewing it in isolation.

By taking advice early, you’ll have a clearer understanding of your tax position and greater confidence that you’re making informed decisions throughout the sale process.

The Bottom Line

Business Asset Disposal Relief can provide valuable tax savings, but qualifying isn’t automatic. Understanding the conditions well before a sale allows you to identify any potential issues, explore planning opportunities where appropriate and avoid unnecessary surprises during negotiations.

If selling your business is on the horizon, don’t assume everything will fall into place. A review carried out early in the process could make a significant difference to your overall tax position and help ensure you’re able to retain more of the value you’ve worked so hard to create.

Thinking About Selling Your Business?

Whether you’re just starting to think about an exit or you’re already in discussions with a potential buyer, our tax specialists can help you understand your position and identify planning opportunities before it’s too late.

Get in touch with our team today to discuss your exit plans and find out how we can help you prepare for a successful sale.

There are specific rules dealing with earnings received during a period of absence from employment.

Section 38 ITEPA 2003 broadly provides that, where an individual ordinarily performs some or all of their employment duties in the UK, earnings relating to a period of absence are treated as relating to UK duties, except to the extent that the duties would have been performed outside the UK had the absence not occurred.

HMRC’s guidance at EIM40202 considers this specifically in the context of illness. HMRC gives an example of a non-UK resident employee who normally works in the UK one day a week and misses three UK working days due to illness. The earnings relating to those three days remain attributable to UK duties, notwithstanding that the individual did not physically work in the UK.

For your client, we therefore think the key question is where he would have been working during the period of sickness had he not been absent.

If, for example, he had already been scheduled to work in the UK during part of October to December 2025 but was unable to do so because of his illness, the sick pay attributable to those days could potentially be regarded as UK employment income.

On the other hand, if he would have been working outside the UK during that period, the corresponding sick pay should generally be treated as relating to overseas duties. If there were no scheduled assignments and he was simply on call to work in any jurisdiction, the position is less clear-cut and would need to be considered based on the particular facts and working arrangements. 

It would therefore be helpful to establish whether the employer can identify where the client was due, or expected, to work during October, November and December 2025 had he not been ill. If there were no planned assignments, we would suggest retaining evidence of this together with details of how assignments are ordinarily allocated, to support the treatment adopted.

The double tax treaty provides that employment income of a Spanish resident is generally taxable only in Spain unless the employment is exercised in the UK. Therefore, even if an element of the sick pay were regarded as relating to UK duties under the domestic legislation, the treaty position should also be considered before concluding the amount taxable in the UK.

Why Every Seller Needs One

For many business owners, selling a company is a once-in-a-lifetime event. Years of hard work have gone into building the business, and understandably, the focus is often on finding the right buyer and achieving the best possible price.

What is sometimes overlooked is that buyers are not simply purchasing a business based on its profits. They are also buying its history. That means they will want to understand whether the company has complied with its tax obligations and whether there are any hidden risks that could come back to haunt them after completion. This is where a pre-sale tax health check can make all the difference.

What is a pre-sale tax health check?

Think of it as carrying out your own due diligence before a buyer does.

Rather than waiting for a buyer’s advisers to scrutinise every aspect of your business, a tax health check allows you to review your tax affairs in advance, identify any potential issues and, where possible, resolve them before they become part of the sale process. It’s a proactive exercise rather than a reactive one.

Instead of answering difficult questions under the pressure of a live transaction, you have the time and space to deal with matters properly.

Why does it matter?

Every buyer wants certainty.

When a buyer carries out tax due diligence, they are looking for anything that could result in an unexpected tax liability after they acquire the business. If they identify concerns, there are several possible outcomes and none of them are usually good news for the seller.

They may seek a reduction in the purchase price, request additional warranties or indemnities, or simply delay the transaction while further investigations take place. In some cases, repeated issues can even cause a buyer to walk away altogether. Many of these situations could have been avoided had the issues been identified earlier.

What sort of issues are commonly found?

You might assume that a tax health check is only worthwhile if you know there are problems lurking in the background. In reality, many businesses discover issues they had no idea existed.

Some of the more common areas include:

• PAYE or benefits provided to directors that have not been reported correctly.
• VAT treatments that have evolved over time without being reviewed.
• Historic Corporation Tax positions that may not be fully supported.
• Loans to directors or shareholders that have unexpected tax consequences.
• Share issues, option schemes or company reorganisations that were not documented as intended.
• R&D claims or capital allowance claims that may require additional evidence.
• General compliance matters such as late filings or incomplete records.

None of these automatically mean a sale cannot proceed. However, discovering them yourself is almost always preferable to having a buyer uncover them first.

It’s not just about fixing mistakes

One of the biggest misconceptions is that a tax health check is simply an exercise in finding problems. In reality, it is just as much about identifying opportunities. For example, it may highlight that certain tax reliefs are available, that your ownership structure could be improved before a sale, or that there are planning opportunities which are only available if action is taken well in advance of completion. These opportunities often disappear once contracts have been exchanged, so timing is critical.

When should you carry one out?

Ideally, the answer is sooner than you think. Many business owners only start thinking about tax once a buyer has been found. By then, there may be limited scope to resolve issues or undertake any meaningful planning.

Starting 12 to 24 months before an anticipated sale provides far greater flexibility. It gives time to investigate any historic matters, implement planning where appropriate and ensure records are in good order before due diligence begins.

Of course, not every sale comes with that luxury. Even if a transaction is already underway, carrying out a review can still help you understand where any questions are likely to arise and prepare robust responses.

 A smoother transaction for everyone

Selling a business is demanding enough without unexpected tax issues appearing halfway through the process. A pre-sale tax health check won’t guarantee that a buyer won’t ask questions; they almost certainly will, but it can make those conversations far easier.

It demonstrates that the business has been well managed, provides confidence in the information being presented and reduces the likelihood of unpleasant surprises affecting negotiations. Ultimately, buyers value certainty. The more confidence they have in what they are buying, the more straightforward the transaction is likely to be.

The bottom line

 A successful business sale is about much more than agreeing a headline price. Protecting that value throughout the transaction is just as important.

A pre-sale tax health check allows you to identify risks before they become someone else’s discovery, gives you time to put matters right where necessary and ensures you enter negotiations from the strongest possible position.

Next Steps

If selling your business is on the horizon, contact us. Even if it is still a year or two away, taking the time to review your tax affairs now could be one of the most valuable steps you take before putting the business on the market.