Prior to the Autumn Statement there was speculation that the Capital Gains Tax rate may be increased to fall into line with income tax rates, as a perceived easy target to help the government plug the fiscal black hole.
While the tax-free allowance is to be more than halved in April 2023 to £6,000, and further reduced in April 2024 to £3,000, the increase in overall tax rate did not materialise. Whilst this provides some relief for hardworking entrepreneurs, now may be the right time to consider using a Solvent (Members’ Voluntary) Liquidation to extract value and mitigate the risk of a future increase. In addition, a return of capital from an MVL may also benefit from Business Asset Disposal Relief (Entrepreneurs’ Relief), with a tax rate of 10%.
If the Autumn Statement has prompted you to think about your business options, please don’t hesitate to contact our Corporate Restructuring team to discuss a plan going forward.