Selling a software or technology business? Get the tax right first.

EMI options are often exercised on a sale. Where the scheme conditions have been met, employees can benefit from capital gains treatment, and shares acquired through EMI can qualify for Business Asset Disposal Relief without the usual 5% shareholding test. The scheme paperwork and valuations need checking before the deal.

Almost certainly. R&D claims have been a focus for HMRC, and buyers' due diligence reviews them closely. Weak or poorly documented claims can lead to price reductions or specific indemnities.

It can. Overseas buyers often pay partly in their own shares or with earn-outs, which raises UK tax questions for the sellers. The structure of the consideration needs reviewing from the UK side.

Possibly not. You need at least 5% of the shares and votes, plus a 5% economic entitlement, throughout the two years before the sale. If dilution has taken you below that, the relief may be lost and your gain taxed at the main rate of 24% rather than 18%. It is worth checking your position against the cap table well before an exit.

They can. As well as holding 5% of the shares and votes, you need a 5% economic entitlement, which looks at your share of profits and of assets or sale proceeds. Preference shares held by investors can reduce that entitlement, so the rights attached to each share class need checking.

Gains on unapproved options are usually taxed as employment income when the options are exercised, rather than as capital gains. The company may also need to operate PAYE and pay employer's National Insurance. Option holders and the company should understand the cost before the deal is agreed.

Sometimes buyers prefer to cancel options in return for a cash payment. But a cash payment for cancelling options is usually taxed as employment income, even for EMI options that would otherwise get capital treatment. Exercising the options and selling the shares is often better for employees.

It usually can be, if it is linked to the business's performance rather than your continued employment. A cash earn-out of unknown amount is usually valued and taxed as part of the sale at completion. If it is tied to you staying, HMRC may tax payments as employment income instead.

Because a cash earn-out is usually valued and taxed at completion, you could pay tax on money that never arrives if targets are missed. There can be relief for this later, but the rules are complex and timing matters. This is one reason the structure of an earn-out deserves attention before you sign.

It can. Cash needed for the business, such as working capital, is generally fine. But large surplus cash balances, for example from funding rounds or retained profits, may be treated as investment and could put Business Asset Disposal Relief at risk.

Beyond R&D claims, buyers often review share scheme compliance, PAYE on contractors and staff, and VAT on sales to overseas customers. Where there are overseas subsidiaries or staff, they will also look at the international tax position. Finding issues early gives you time to fix them or prepare an explanation.