What next? Coming out of lock-down...

The last few months have been a new experience for us all. Irrespective of the level of trade they’ve experienced during the lock-down, many business owners have used the time to consider what they want from the future. Some have decided to scale back their operations for a quieter life, less hassle and perhaps less money, whilst others are excited about making the most of the opportunities that will inevitably arise. Regardless of your appetite, here are a few things to consider:

Setting the scene

Whilst there will likely be a stimulus package in the next budget, it will be short-term. Given the level of Government spending this year, taxes must rise. In addition to the scaling back in entrepreneur’s relief allowance, in the March 2020 budget, from ￡10m to ￡1m, the Chancellor of the Exchequer has announced a wide-ranging review of capital gains tax. Capital taxes may never be as low again! If you are contemplating a major transaction you should act now.  

Risk management

Perhaps you’ve built up value in the business, cash deposits or property, that you want to protect. You could be exposing these assets to unnecessary risk by holding them in an unincorporated business or in the same limited company as your trading business. Whether you want more protection or simplicity as you approach retirement, to ring-fence risk as you expand or pass the business to the next generation, now is a good time to consider if your existing structure is the right one.

Under current tax legislation, and with the right professional advice, a re-structure can be achieved with no tax to pay. A re-structure needn’t be a drawn-out process. Many privately-owned businesses could implement a change in structure in a matter of weeks.

Buying and selling

We’re all conscious of the increase in the number of business failures. There will be more to come. More businesses go under on the way out of a recession than on the way in. If you’re a buyer then there are bargains to be had; many valuations will be low.  If you are a cash buyer you’ll be able to move more quickly than the competition – the deal could be yours!

Depending on your sector now might be a good time to sell. Especially as the tax regime is unlikely to ever be as favourable again. If you are concerned about tax and, or want to put something back then employee ownership could be for you. Selling the business to the employees, continues to gain traction. This can be achieved entirely free of capital gains tax. These tax benefits are likely to survive the Chancellor’s review. If you haven’t considered this option before, it is worth considering.

Cash and funding

There has been a lot of discussion about the importance of cash over the past few months. It seems some people have woken up to the reality that cash really is king. Most of us knew that already! Your business might be coming out of lock-down with depleted reserves. Now could be a good time to consider re-financing your business to inject the liquidity you need to move forward. Your existing bank is probably the best option. With some of the major banks still closed to new customers, changing to your preferred bank might not be possible. If you are stuck it could be worthwhile considering re-financing your assets or using invoice discounting. 

None of the issues in this article should be addressed without first taking professional advice. If you would like to have an informal discussion about any of the topics covered, please get in touch.