CAPITAL GAINS TAX UPDATE – Take advantage of current tax rates

On Wednesday 11th November, the Office for Tax Simplification (OTS) released the results of their review on Capital Gains Tax (CGT).

The clear recommendation is unfortunately as expected – to align the rate of CGT with income tax rates – a massive potential increase in the rate of tax applied on the proceeds of the sale of a business.

It seems excessively harsh to reward entrepreneurs this way, with a tax increase on what may be a once in a lifetime event, reducing the reward for sweating blood and tears to build their businesses and accumulate value within their business.

It is anticipated that the changes to the CGT tax will be implemented, following the budget planned for next March, probably taking affect from 6th April 2021.

There is now a short window to take advantage of the current tax rates, usually extracting shareholder value by placing the company in a solvent Members Voluntary Liquidation.

capital gains tax

The challenge for business owners will be in measuring the enhanced value of a going concern sale which may attract a goodwill value in excess of tangible net asset value, or simply taking steps to wind the business down and arranging a distribution of the surplus assets to the shareholders.

We can assist with achieving an orderly exit from the business, maximising value for shareholders, or simply conduct a Members Voluntary Liquidation for those who have managed to achieve a sale of the business and wish to extract the value under the current tax regime.

To discuss your options please call 01489 550440 or send us an email.