Discuss your options

Following Labour’s victory in the General Election, speculation has continued in relation to the future of capital gains tax. Specifically, as to if and when the Chancellor will announce changes to rules and rates and what the extent of those changes might be.

At this stage, any comments as to what might change and when, is pure speculation. Nonetheless, as we have seen numerous times before, the level of uncertainty and heighted expectation that ‘adverse’ changes could be forthcoming, in particular for business owners, has caused many clients to explore their options.

With talk of an ‘early’ Autumn statement being possible and ahead of what would usually be a summer ‘slowdown’ in the corporate finance world, it would not be easy to implement a genuine transaction between now and the Autumn, particularly if the wheels are not already in motion.

However, if there is an appetite to at least discuss your options for the short, medium or long term and in order to be prepared to proceed with a transaction prior to any Spring 2025 budget, then a senior member of the FRP team would be happy to have an initial introductory meeting at no cost (contact details below).

Given the breadth of expertise within the local team, we can discuss transactions such as selling to a trade purchaser, seeking private equity investment, or selling your business to your management team/employees in the form of a management buyout (‘MBO’) or Employee Ownership Trust (‘EOT’). These latter two routes, in particular, should be achievable prior to any hypothetical capital gains tax changes, if they are introduced from the start of the 2025/26 tax year. To conclude either a trade sale or private equity investment would require us to hit the market early in the autumn, so if you wish to explore these prior to any Spring 2025 budget, please get in touch as soon as possible. Alternatively, less ‘knee jerk’ options can also be considered such as undertaking a strategic review or embarking upon an acquisition or ‘buy and build’ strategy.

Similarly, our local restructuring team have deep experience of facilitating members’ voluntary liquidations (‘MVLs’). This would be a consideration for someone who may have been operating a successful business, with cash held on the balance sheet but has reached a time in their lives where they wish or may wish to ‘close the doors’ on their business. With a 10% rate of capital gains tax usually payable upon the first ￡1m of proceeds, where a qualifying claim for Business Asset Disposal Relief (‘BADR’) is made, then a possible abolishment of BADR alongside an alignment of CGT rates to income tax rates, could result in a business owner accelerating their plans. A number of clients are already thinking this way and are moving to MVL in the next couple of months.

Whatever changes are forthcoming, let’s just hope that they are sensible and acknowledge the overall contribution SME’s make to the UK economy and the funding of public services. The local FRP team are committed to supporting the long-term prosperity of local businesses and jobs whether that involves business owners realising or growing shareholder value.

To find out more about how we can help, please contact one of the team for an informal chat Chris Adlam , Ryan Symonds , James Cooper , Dan Bowtell , Richard Bloomfield , Dave Howes , Jon Dodge , Matt Field , Alex Hunton , Joanne Price or Tony Longman .