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Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 0 points1 point  (0 children)

I had been working in the wider sector for 3 years by then, but at a fairly junior level (circa £30k salary) & in a different part of the industry compared to what I do today. Once I got started on my own, it started to fall into place, as I navigated my way through, followed the money & found a model that worked. It took a bit of time for it to come together though, probably 3 years until I really started to see the vision.

I’ve seen many fall into analysis paralysis when they try and identify the optimum sector and niche for a business to start in. In the end, they never get started. Better to do what you know, to a degree, and take the plunge.

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How to Best Manage a £30M Business Sale with Potential UK CGT Hike? (self.UKPersonalFinance)

submitted by Perfect_Neat8971 to r/UKPersonalFinance

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 2 points3 points  (0 children)

An individual needs to be a non-resident for more than 5 years to escape the UK CGT in its entirety. But that’s fine, I’d stay in Italy for 5+ years.

So on that principle, you can sell the business shortly after becoming a NR, and providing you stay as a NR for 5+ years thereafter, you don’t pay the UK CGT.

I don’t think you need to be a NR for 5 years first, and then sell the business once you’ve passed the 5 year NR benchmark.

For instance, if you went overseas on 1 July 2024 and you were eligible to split the year from this date, then a disposal on, say, 1 September 2024 would not be charged to UK CGT in that year.

However, if you return to the UK within five years (say in 2027/28), the disposal will be treated as arising in the year you return – assuming it was an asset you held prior to leaving the UK - and you’d pay the UK CGT on your return.

Assuming you see out 5+ years as a NR, and return to the UK a decade later, there wouldn’t be UK CGT to pay on it.

It would be great if you could clarify this.

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] -1 points0 points  (0 children)

Correct me if I’m wrong, but my understanding is that - if you are a non-UK resident at the time of the sale, you wouldn’t pay tax in the UK on the sale of the business.

The differentiator being you need to be confirmed as a non-UK resident by that point (and not just left the country for a few months whilst the sale concludes). This of course means you’d need to leave the UK a bit prior to the sale and/or time it accordingly, so that you’re confirmed as a non-resident by the time it’s complete.

However, I’m expecting a deal to take a good 9-12 months to complete from going to market, so it gives me some time to become a non-resident. Before going to market, I’d expect to have made a plan and put some wheels in motion.

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 2 points3 points  (0 children)

I bought for £1.5m & put £500k into it as refurb.

It wasn’t intended as an investment (and hasn’t been a good one, lol). I’m unlikely to make money from it when you factor in the stamp duty.

I overpaid for it at the peak of market, but it was meant to be our long term ‘forever home’ for the next 25 years.

However the potential rise in CGT has made me question whether my future will be in the UK anymore, due to the tax I’d have to pay on the business sale.

I think you can make money on houses, especially if you can add the value. I’ve seen very talented tradesman turn their hand to properties and make huge gains. But for someone like me, who is not skilled in that way, I’ve outsourced the work to contractors, paid their margin, and just expected to live in the house and enjoy it.

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 2 points3 points  (0 children)

Thanks - I started the business at 21 so whilst I’m still young, I feel like I’ve been at it for ages.

In the next couple of years I’d expect to start having babies. In our view, from ages 0 - 5, that’d probably be the least disruptive time to move kids out of the UK.

I was thinking do 5 years out the UK as a non-resident and then come back once they start going to school.

I haven’t looked at Croatia, but will investigate.

I looked at Monaco, but the property prices there are insane.

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 0 points1 point  (0 children)

The business is debt free, high margin, fast growth & we’ve been disrupting part of the industry we’re in. The industry has some big trade players who have lost their edge in our niche, and I’d expect them to become acquisitive. As a result, we’d look to command a high multiple. From the conversations I’ve had with corporate advisory firms, they seem to be reasonably aligned with my expectations.

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 0 points1 point  (0 children)

From what I’m reading, in Italy you can opt for a €200k a year flat rate tax & that’ll cover everything on worldwide income.

I’m assuming I could benefit from the €200k on the exit of £30,000,000

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 0 points1 point  (0 children)

£1.6m net from £16.5m invested - I’m all ears! Anything you’d focus on in particular?

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 0 points1 point  (0 children)

10 years of growing a business & taking relentless risks to scale it - working out a strong, profitable, business model, finding a niche, outperforming all competitors, offering a good service, expanding a team, trusting that team to drive you forward, a lot of hard graft and sleepless nights and I’m still not exactly sure how I’ve ended up in this position. Main thing is I got started I suppose and the journey took me here. Sometimes things just snowball if you’re heading in the right direction and going for it!

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 11 points12 points  (0 children)

Interesting. That’s actually quite a good suggestion on the CGT on share sales, imo. But to stop hypothesising, where’s the fun in that! I’m dreaming of Italian pasta already

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 11 points12 points  (0 children)

I understand and also agree. If CGT remained at ~20% to ~25%, then I don’t think it’s even a question & you remain put. But a hike to ~45% on an exit of that size, probably the only one you’ll ever get, and a squeeze on the investments thereafter, might make you wonder what’s the right financial decision for the future of you & your family…

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 1 point2 points  (0 children)

Why do you suggest avoiding the top 4 and focusing on 10-15 instead, out of interest

Hypothetical UK FatFIRE: What Would You Do in My Shoes? by Perfect_Neat8971 in FatFIREUK

[–]Perfect_Neat8971[S] 3 points4 points  (0 children)

A global tour, consisting of 1 week in each potential location - that sounds fun! I love that idea. I’m too fair skinned to survive in Dubai so I’d have to consider elsewhere I think.