Business owners could protect their wealth by selling before expected post-Covid-19 tax changes, corporate accountants advise
Company owners nearing retirement, or contemplating a sale for other reasons, should consider protecting their wealth and investment by doing so before expected tax changes as the Government seeks to bolster the economy following the Covid-19 pandemic and lockdown, says accountants and business advisers, Garbutt + Elliott.
The firm is contacting corporate clients, making owners aware of the potential consequences of possible tax increases for business sales, which the government may introduce from the Autumn statement in November to recoup substantial loans and payments made during the height of the pandemic to protect businesses and jobs.
Head of Garbutt + Elliott’s corporate team, Tony Farmer, says: “Timing the sale of a business built up by an owner manager over several years is often a complex decision involving both personal and commercial considerations.
“We believe that, for people considering lifestyle changes, such as retirement, in the next few years, or because of coronavirus-enforced market changes, which are leading them to hand their business down to a younger management team, they can best protect their wealth by doing so now as time may be running out to reap maximum financial benefits.
“Recent commentary suggests that the current attractive rates of tax on business sales, of between 10 and 20 per cent, might not be here for much longer making a total, or partial, exit now far more attractive and financially rewarding.
“One problem created by the pandemic and lockdown is that it has led many businesses to focus on short-term survival rather than long term strategy but delaying a sale, or exit, due to personal financial, or retirement planning, may lead to higher tax charges if rates increase or, as been widely suggested, capital gains tax rates are more aligned with income tax.”
According to updated Office For Budget Responsibility (OBR) costings, the UK’s package of measures in response to the pandemic is around £123bn and worst case estimates are that the economy will shrink by 12.8 per cent in 2020, more than after the 2008 financial crash and this is likely to be paid for by tax rises and spending cuts.
Garbutt + Elliott’s corporate team incorporating its award winning tax team, works out of offices in York and Leeds, and has completed 65 UK-wide transactions, including businesses sales, mergers, acquisitions and refinancing totaling £160m in the last 12 months.
If you have any questions or queries please contact Tony Farmer at firstname.lastname@example.org