The Budget - BADR/Entrepreneurs Relief
Discussion
I am looking to sell my business next year so have been watching this budget with a keen eye.
I noted that higher rate capital gains tax is increasing to 24% which will hit me but it says the Business Asset Disposal Relief (BADR) will remain at 10% this year, before rising to 14% on 6 April 2025 and 18% from 6 April 2026-27.
So am i right in thinking that come April next year, i will get relief of 14% from the 24% capital gains tax, leaving a 10% tax bill?
I noted that higher rate capital gains tax is increasing to 24% which will hit me but it says the Business Asset Disposal Relief (BADR) will remain at 10% this year, before rising to 14% on 6 April 2025 and 18% from 6 April 2026-27.
So am i right in thinking that come April next year, i will get relief of 14% from the 24% capital gains tax, leaving a 10% tax bill?
TownIdiot said:
No it's just what they've called it.
It's the rate of tax paid.
Maybe the relief refers to completing the transaction and getting out of the business.
Ah right, thanks for explaining. So in basic terms..It's the rate of tax paid.
Maybe the relief refers to completing the transaction and getting out of the business.
Now: £1mill sale at 10% = £100k tax bill
April 25: £1mill sale at 14% = £140k tax bill
April 26: £1mill sale at 18% = £180k tax bill
I think this is what the other person mentioned on the other thread.
fellatthefirst said:
Ah right, thanks for explaining. So in basic terms..
Now: £1mill sale at 10% = £100k tax bill
April 25: £1mill sale at 14% = £140k tax bill
April 26: £1mill sale at 18% = £180k tax bill
I think this is what the other person mentioned on the other thread.
Yep, this is the figures I calculated on the other thread. As mentioned, it's only the 'profit' that's taxed, not the sale amount and less any (tiny) personal CGT allowance Now: £1mill sale at 10% = £100k tax bill
April 25: £1mill sale at 14% = £140k tax bill
April 26: £1mill sale at 18% = £180k tax bill
I think this is what the other person mentioned on the other thread.
If using an MVL, rather than selling, does anyone on here know if the date of withdrawal of the company funds to your own account is the date that applies for BADR tax purposes, or is it the date that the company is liquidated, or some other date? I know the full process can take many months
It’ll be interesting to see how this affects business over the next few months. We’ve been approached a number of times about selling, so will the CGT increase push more businesses on to the market to beat the deadline, reducing valuations by making it a buyers market, or will multiples increase to offset the tax bills? I am guessing the former. Perhaps a good time to be buying?
M1AGM said:
It’ll be interesting to see how this affects business over the next few months. We’ve been approached a number of times about selling, so will the CGT increase push more businesses on to the market to beat the deadline, reducing valuations by making it a buyers market, or will multiples increase to offset the tax bills? I am guessing the former. Perhaps a good time to be buying?
There will be some stats out there somewhere - this has been increased and decreased over the years so I'd imagine that someone will do the analysis in the coming days.Personally I am not sure it makes *that* much difference, but then I am pretty sanguine over stuff like that anyway.
If you sell a company can you open an overseas account be paid to that and move to another country for 12 months+?
Would that work as a way around exiting a company. If going to have to pay £180k and nothing to show for it may aswell blow up to £180k and have a good time rather than handover to government.
Sounds to simple probably plenty of reasons why this cant happen.
Would that work as a way around exiting a company. If going to have to pay £180k and nothing to show for it may aswell blow up to £180k and have a good time rather than handover to government.
Sounds to simple probably plenty of reasons why this cant happen.
JimmyConwayNW said:
If you sell a company can you open an overseas account be paid to that and move to another country for 12 months+?
Would that work as a way around exiting a company. If going to have to pay £180k and nothing to show for it may aswell blow up to £180k and have a good time rather than handover to government.
Sounds to simple probably plenty of reasons why this cant happen.
There are ways of becoming tax resident in another country for sure. It's a bit more complicated than just not being in the UK when the transaction goes through.Would that work as a way around exiting a company. If going to have to pay £180k and nothing to show for it may aswell blow up to £180k and have a good time rather than handover to government.
Sounds to simple probably plenty of reasons why this cant happen.
JimmyConwayNW said:
If you sell a company can you open an overseas account be paid to that and move to another country for 12 months+?
Would that work as a way around exiting a company. If going to have to pay £180k and nothing to show for it may aswell blow up to £180k and have a good time rather than handover to government.
Sounds to simple probably plenty of reasons why this cant happen.
Yes, but it needs to be five years not one year.Would that work as a way around exiting a company. If going to have to pay £180k and nothing to show for it may aswell blow up to £180k and have a good time rather than handover to government.
Sounds to simple probably plenty of reasons why this cant happen.
fellatthefirst said:
I am looking to sell my business next year so have been watching this budget with a keen eye.
Consider selling into an Employee Ownership Trust EOT. I have recently helped a business through that process and I would recommend Postlethwaite Solicitors.One of the key benefits is 0% CGT for qualifying sales to EOT. I expected we will see more of these over the next few years as a result of the recent changes in the budget.
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