Time to consider a sale? CGT rates remain as Autumn statement is scrapped

Contact Doug Martin

or reach out to a member of our Restructuring & Recovery team.

It has been widely speculated that there may have been Capital Gains Tax (‘CGT’) reforms announced in this year’s Autumn Statement, which could have had a significant impact on the net proceeds on transactions from late 2020 onwards.

If you are entitled to Entrepreneurs Relief, qualifying gains (up to the lifetime limit of £1m per individual at the time of disposal) are charged at the rate of 10%. It had been suggested that this and the headline CGT rate of 20% could be amended to be more in line with income tax rates in the Autumn Statement.

In a time of great uncertainty, we are now certain of something: there will be no Autumn Statement, as announced by the government on 23rd September. Good news, as this means no changes to CGT or any other tax rates until Spring 2021!

Whilst there is no getting away from the market continuing to be challenging, serious and well-funded acquirers still exist, and we have certainly seen an increase in the level of activity in the M&A landscape over the last two months. The global pandemic has given all businesses the opportunity to show resilience, be innovative and stand out from their competitors. At present, we are seeing buyers navigating their way through more targeted approaches and being very transparent in their appraisals of opportunities.

Given the recent announcement from the Chancellor, if you are currently considering a sale of your business, we encourage business owners to act quickly in order to take advantage of the window of opportunity that now exists to conclude a transaction at current CGT rates before potential tax reforms are back on the agenda ahead of the Budget in Spring 2021.

Please don’t hesitate to get in touch to have a confidential discussion with us regarding a potential sale of your business.

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