CGT review: Is now the right time to sell my business?
Capital gains tax is the levy you pay on the profits or gain that you make when you sell, give away or dispose of something you own i.e. businesses, investments, shares in companies etc.
Earlier in the year, the Chancellor, Rishi Sunak commissioned a formal review of Capital Gains Tax (CGT). He published his letter to the Office of Tax Simplification (OTS), which asked the OTS to carry out a review on how GCT compares with other taxes i.e. income tax. The OTS is the independent adviser to government on simplifying the UK tax system.
According to its report published on 11 November 2020, the OTS state that the alignment of CGT rates with income tax rates could raise an additional £14 billion a year. The report suggests that this would mean cutting exemptions, doubling rates (i.e. to closely align CGT and income tax) and amending/abolishing certain business reliefs.
Whilst these are only recommendations for reform, it is likely that the Chancellor will set out the changes (if any) to GCT in his next budget. Should the chancellor implement any of the recommendations set out above, this is likely to have a detrimental effect on business owners looking to either sell the business as a whole, investments or shares.
Any changes implemented by the Chancellor will be focused on protecting the economic condition of the UK as a result of the Covid-19 pandemic.
If you are thinking of selling your business we suggest that you carefully consider the advantages of doing so now to potentially crystallise your gain in the event that CGT rates increase and ensure that you take expert tax advice.
Our business services team have extensive knowledge and experience in dealing with business sales. To get in touch, please contact our business services team on 01202 525333 or email our business services partner, Neil Cook at firstname.lastname@example.org