Our corporate finance team examine what changes to Capital Gains Tax rates could mean for businesses.
On Monday 13 July, the chancellor wrote to the Office of Tax Simplification asking them to look into Capital Gains Tax (CGT) rates, potentially with a view to aligning them to income tax rates in the Autumn Statement this year. This represents a significant blow to business owners when it comes to selling their company.
Having already suffered a significant hit to the lifetime allowances for Entrepreneurs' Relief in March of this year, the alignment of CGT rates with income tax rates could see the percentage of sale proceeds paid over to the treasury increase from 20% to as much as 45%. Business owners already contemplating a sale might look to accelerate such a process in order to complete a transaction ahead of potential changes in October.
Owners of cash-rich smaller businesses might seek to utilise a members' voluntary liquidation arrangement in order to extract value from their company in a tax-efficient and timely manner.
Over the coming weeks, our corporate finance team will be releasing a series of useful articles and guides on this critical topic across email as well as social media.