• Swindon & Wiltshire M&A, deals
• Wednesday August 28 2024
• Author Name: Peter Davison

Rumoured Capital Change Tax changes worry business owners looking to sell up

Business owners who are in the process of selling their firms are trying to speed up competition deals before the Autumn Budget on October 30, a corporate lawyer has revealed.

Kim Klahn, a mergers and acquisitions expert at Bristol law firm Clarke Willmott says business sellers are worried about changes to the Capital Gains Tax rules.

“Among the various alternatives being considered by the Government is the abolition of Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief,” said Kim, a partner in the firm’s corporate team.

“Business owners selling privately-owned firms typically qualify for BADR which allows them to pay a significantly reduced CGT rate of 10 per cent on qualifying business disposals,” said Kim.

“We are currently seeing a rush to finalise deals ahead of the Budget on October 30, driven by speculation BADR could be reduced or abolished, leading to higher tax liabilities for business sellers.

“If the government does make changes, they could come into effect immediately or at the start of the next tax year, potentially affecting financial outcomes.”

Kim, a corporate partner who regularly advises on mergers and acquisitions, says if the government decides to reduce or scrap BADR, it could affect business owners’ retirement strategies, and reinvestment decisions.

“This is proving a strong motivator for accelerating the completion of business sales before any changes come into being.”

Kim represents many privately-owned SMEs and says ultimately the government’s decision on changes to CGT will be closely watched as it will have far-reaching implications for taxpayers and the broader economy.

Business Asset Disposal Relief is applicable to various disposals, including assets of a sole trader, interests in a partnership, trust assets, and shares in a private trading company.