Selling your business: will we see higher Capital Gains Tax in 2021?

Graham Alexander

Graham Alexander

Partner and Head of Corporate Finance

Whilst the COVID-19 pandemic has led to significant uncertainty for many businesses, the Chancellor has already indicated that he will be looking to implement measures to reduce the deficit.

With no Autumn budget this year it is anticipated that the budget next year (date yet to be determined, but Spring 2021 is a likelihood) will bring about measures from the Treasury which will look to address the significant levels of public borrowing. 

There is a waiting game with regard to what the Chancellor may announce in his next budget, but there are some areas of the tax system that are already looking like prime targets. Of particular relevance to those business owners considering selling or partially exiting their business is the wide speculation that Capital Gains Tax (CGT) is set for reform, which could significantly impact the net proceeds available from business disposals. 

For example, bringing CGT closer in line with income tax rates could be one option the Chancellor considers and this would see the tax from profit on asset sales more than double. 

Despite challenging conditions for many businesses, there still remains a high level of liquidity in the market with a number of trade players and private equity funds with access to capital who are looking for investment opportunities. 

If you are contemplating selling your business, it is important to consider the merits of looking to conclude a transaction before any potential tax changes which could form part of the next budget. If the fast tracking of an exit isn’t possible before tax rates rise, then we can assist you with a range of options to lock in Capital Gains Tax rates now and then manage your exit at a later stage. 

If you would welcome a confidential discussion on the above please do not hesitate to contact a member of our Corporate Finance team.