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On 30th October 2024, Chancellor Rachel Reeves announced her Autumn Budget, which has introduced several new changes that could affect your business.
We have set out a brief overview of some of the key updates that we feel business owners should be aware of.
Capital Gains Tax (CGT) Increase: Broadly, CGT is charged on the gain realised when an asset that has increased in value is sold or otherwise disposed of. The rates of CGT have risen with effect from 30th October. The lower rate of tax has increased from 10% to 18%, and the higher rate from 20% to 24%. CGT rates on residential property sales remain unchanged.
If you are considering selling your business (including shares in the company through which you operate your business), you should be aware that any gain realised will now be subject to a higher rate of tax, potentially leading to a significantly higher tax bill and reducing your net proceeds.
Business Asset Disposal Relief (BADR): Formerly ‘Entrepreneurs Relief’, BADR is a relief that may be utilised by some business owners enabling them to pay a lower rate of CGT. Under the new Budget, the CGT rate for qualifying business assets will rise from 10% to 14% for disposals made on or after the 6th April 2025. For assets sold on or after 6th April 2026, this rate is set to rise again to 18%.
Increased Private Equity Tax: Tax on “carried interest” from private equity profits has increased from 28% to 32%.
Unchanged Corporation Tax Rate: The main corporation tax rate remains stable at 25% for companies with taxable profits over £250,000.
More information and full details of the Budget are also available here: GOV.UK
We always encourage clients to seek financial and accountancy advice, to make sure they are maximising the returns and gains out of their business, in the most efficient way. The announcement of these changes makes no exception to this.
If you are a business owner, you should seek professional tax and accountancy advice, to help you make informed financial decisions and make sure your business continues to thrive under the new rules, and that you aren’t caught out by any nasty surprises should you come to sell.
Our Corporate Team are committed in helping you position your business for continued success. We work with trusted financial and accountancy advisers, to structure your deals in a way that is most beneficial for you, securing you a great outcome.
Our specialist team provides advice on a range of corporate matters, often supporting current or prospective business owners and company directors. Our Business & Commercial team are recommended in four categories in The Legal 500 UK 2025 – with several colleagues receiving special recognition, including our Head of Corporate Josh Perez-Fosh being acknowledged as a ‘Leading Associate’.
If you are thinking about selling or buying a business, please reach out to our Corporate team on 01603 723715 or complete our online enquiry form.
For full details of our Corporate services, please follow this link.
This article was produced on the 1st November 2024 by our Corporate team for information purposes only and should not be construed or relied upon as specific legal advice.
