Business owners, directors and investors have ‘inundated’ a south coast legal firm with instructions amid fears over potential changes to capital gains tax (CGT) in the forthcoming Budget.
Team members in the Business Services department at Ellis Jones Solicitors say their workload has rocketed in recent weeks as desperate clients fast-track exit plans and sales of ‘chargeable assets’ to avoid paying higher rates of tax or miss out on currently available reliefs.
CGT is a tax charged on financial gains from the sale, disposal or transfer of assets such as company shares, second homes and certain other possessions.
For directors looking to exit through a business sale, the present rules mean that, subject to specific criteria being achieved around timescales and levels of ownership, the first £1 million of gains attract a 10% CGT rate.
Amounts above that are taxed at between 18% and 24% depending on which personal tax band applies to the seller.
The 10% rate is available through Business Asset Disposal Relief (BADR), previously known as Entrepreneurs’ Relief.
There has been much speculation that the Chancellor may abolish or reduce BADR or indeed increase headline rates of CGT in the Budget on 30 October 2024.
Neil Cook, Partner & Head of Business Services at Ellis Jones, said:
“We have been inundated with business owners desperate to see deals completed before any Budget changes kick in.
“There is a fear that plans for retirement could be wrecked because people are suddenly placed in a catastrophic tax position.
“We’ve seen before that Budget changes can be made effective immediately, without any grace period, so people are genuinely worried.”
Fellow Ellis Jones Partner Wayne Spolander said the amount of CGT-related instructions at the firm began to pick up after the General Election but has intensified dramatically in the past few weeks as the countdown to the Budget has gathered pace.
Wayne said:
“We’ve had instructions right across the spectrum of owner-managed business with people looking to sell everything from garden centres to heating engineering firms to amusement parks.
“For those who have been thinking of disposing of their businesses, the prospect of potential tax changes in the Budget is acting as a definite catalyst.
“While we are experts in the law, we strongly recommend those in this situation speak with a tax expert or accountant for the best tax advice around CGT.”
Ellis Jones’ experience reflects a similar trend reported elsewhere. In its latest quarterly survey of business sentiment, the first since the election, British Chambers of Commerce has found that taxation is now more of a concern among members than inflation.
Ahead of the Budget, ministers have said they will not raise the main rate of Corporation Tax above 25%, and will maintain the existing headline rates of VAT, personal income tax and employee National Insurance.
https://www.ellisjones.co.uk/