Well, we were Nearly Right
I’ve waited a short while before contacting you, knowing that your inbox has likely been flooded with “What the Budget Means for You” updates. My aim is to ensure this message, which is particularly relevant to business owners, stands out amid the post-Budget information.
Whilst the lifetime allowance did not increase our forecast from the week before the budget of what the new rate may be, does now look very accurate. This does remind me that my grandmother would say even a broken clock is right twice a day 😊!
In summary, if you own a business, here are the key changes:
Business Asset Disposal Relief
The relief rate, currently set at 10%, will:
- Increase to 14% for disposals on or after 6 April 2025.
- Further increase to 18% for disposals made after 6 April 2026.
Capital Gains Tax
- The rate charged on any excess over the lifetime allowance increases from 20% to 24%
So what does this mean for a deal done now?
If your total business sale value is less than £1M then right now (and assuming you have not used lifetime allowance) then there is no change. The same would be true if 2 people owned a business 50/50% and they sold for £2M or less and so on.
If you wait till after 6th April 2025 then things start to change as the rate of tax increases from 10% to 14% on the amount within the lifetime allowance for Business Asset Disposal Relief.
So what now?
If you are considering a sale, now is the optimal time to act or at least put a strategic plan in place as your net receipts will only get worse with time. Right now, we have willing buyers waiting with funds to do deals.
I would add that the successful marketing and sale of a Financial Services business requires substantial, carefully targeted effort, both pre-sale, post agreement through the negotiations and post-sale. In essence to secure the best result, it’s time to start preparing now to beat any of the upcoming deadlines.