BUDGET REACTION: Partner and Head of Corporate at Northern law firm Brabners – CGT on UK M&A

Mark Rathbone, Partner and head of the corporate team at Brabners, said: 

“There’s been a rush of dealmaking in advance of this Budget given concerns that a rise in capital gains tax could be effective immediately, and that business asset disposal relief would end. Wednesday’s news will see many entrepreneurs rest a little easier knowing the relief will still apply on a different rate should they decide to exit. The changes to this valuable relief for entrepreneurs on their business sales will still result in a rise gradually over the next few years, though, so it’s likely that this will still drive a busy cycle of deals completing before tax year end.

“While there will always be people willing to sell up regardless of the tax incurred, many business owners only get one chance to sell their company and provide through that for their retirement, and many will have a non-negotiable net figure in mind. Some business owners may have already felt rushed into a decision, but the capital gains tax regime has historically seen a lot of ups and downs for owner managed businesses, including complex reliefs and exemptions, so taking stock and reassessing deal priorities is sensible.

“There are likely to be further changes to the regime to incentivise the growth being sought whilst balancing the tax take from it.

Crucially, those owner managers are in the driver’s seat with respect to their businesses and can make alternative plans and strategies aligned with the new tax regime to meet their lifetime and lifestyle ambitions.”