How the 20‑something Crowd Is Cashing In
Run‑rate figures show that entrepreneurs under 40 hustling to sell their companies jumped 23 % last year. The count rose from 4,719 in the 2019/20 tax year to 5,803 in 2020/21*.
What’s Fueling This Boom?
From tech darlings to vet start‑ups, health‑tech, and finance firms, the UK’s young builders are attracting the eye of private‑equity and venture‑capital juggernauts. A big part of this is the late‑2020 to mid‑2022 surge in PE‑led dealmaking. For instance, the year ending 5 April 2021, entrepreneurs under 40 turned over £1.03 bn worth of businesses.
Why It Matters for the Tax System
- Slackers who stay behind can make extra‑ordinary wealth, but exits aren’t without pitfalls.
- After selling, those fresh fortunes will need careful tax planning – keep in mind income, pension, and the dreaded inheritance tax.
- Cash left sitting in your bank account might lose real value if inflation creeps in; investing wisely can reap a real‑term return.
- Proceedings from a sale become part of your estate, which can trigger IHT unless you already passed the business on.
Quick‑fire Tips from Andy Hogarth
- Think long‑term. Put sale proceeds into tax‑efficient funds and let them grow.
- Model your cash flow. A simple spreadsheet can surprise you with what you can actually spend.
- Look at the whole picture. You don’t just owe taxes; you’re also deciding what the money does for your family.
- Plan for retirement. With wealth like that, early retirement is on the horizon—if you’re prepared for it.
- Keep the tax people happy. Understand the estate and IHT rules so you can keep more of your success.
What These Numbers Mean for You
Even if you’re not selling your tech company, keep an eye on how the trend might influence innovative funding. And if you’re a young entrepreneur, remember: measure everything, explain everything, and never underestimate the power of a good tax strategy.
Source: HMRC, year ending 5 April 2021.
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