Entrepreneurs’ beware – Capital Gains Tax under review!
Changes to the Entrepreneurs’ Relief scheme were correctly predicted by many advisors last year and in March 2020 the Government announced drastic changes to the scheme (now called Business Asset Disposal Relief). Following the COVID-19 crisis, it would now appear that the whole Capital Gains Tax (CGT) regime will be under attack.
Chancellor Rishi Sunak has announced on Tuesday a review of the UK’s CGT in an effort to reduce the £350bn public spending deficit this year caused by emergency COVID-19 spending.
CGT is a tax paid when disposing of an asset that has increased in value such as shares in a business or a second property. CGT rates are currently set at 10% for basic-rate taxpayers and 20% for higher and additional-rate taxpayers (or at 18% and 28% where gains relate to disposing of residential property).
In this review, the Government will consider increasing CGT in alignment with income tax (20% for lower rate taxpayers and 40-45% for earners of £50,000) and reduce or abolish the £12,300 annual exempt amount.
If you are contemplating a transaction in the short to medium term, whether it is a full or partial exit, there is a strong case to investigate bringing this forward and concluding a transaction within the current tax regime in advance of the Autumn Budget.
The team at HMT provides specialist advice to shareholders, management and companies on acquisitions, fundraisings and disposals and we would be delighted to assist you in your transaction needs.
Feel free to get contact us on 01491579740 to discuss your particular circumstances.
We are passionate about delivering an optimal outcome for our clients and helping them achieve their personal objectives. We understand entrepreneurial businesses because we are oneOur Deals
Partners are supported by high-calibre professional staff who share our core values of enthusiasm, energy, entrepreneurialism and empathy to our client’s objectivesOur Team
Our Partners have unparalleled deal experience in the mid-market and are supported by a team of dedicated deal-doers with specialist capabilities and experienceOur Awards
We have an extensive network of acquisitive corporates, institutional investors and debt providers both in the UK and internationally though our membership of our global network ICFGOur Network