Rush to finalise deals amid fears of Business Asset Disposal Relief abolition

Leading law firm Clarke Willmott LLP is reporting that clients who are in the process of selling a business are trying to speed up completion deals before the Autumn Budget 2024.

Clarke Willmott’s Kim Klahn says with the chancellor warning ‘difficult decisions’ need to be made; one significant area of anxiety is the potential increase in Capital Gains Tax (CGT).

“Among the various alternatives being considered is the abolition of Business Asset Disposal Relief (BADR) (formerly known as Entrepreneurs’ Relief),” said Kim, a partner in the firm’s corporate team.

“Business owners selling privately-owned firms typically qualify for BADR which allows them to pay a significantly reduced CGT rate of 10% on qualifying business disposals.

“We are currently seeing a rush to finalise deals ahead of the Budget on October 30, driven by speculation BADR could be reduced or abolished, leading to higher tax liabilities for business sellers.

“If the government does make changes, they could come into effect immediately or at the start of the next tax year, potentially affecting financial outcomes.”
Kim, a corporate partner who regularly advises on mergers and acquisitions, says if the government decides to reduce or scrap BADR, it could affect business owners’ retirement strategies, and reinvestment decisions.

“This is proving a strong motivator for accelerating the completion of business sales before any changes come into being.”
Kim represents many privately-owned SMEs and says ultimately the government’s decision on changes to CGT will be closely watched as it will have far-reaching implications for taxpayers and the broader economy.

Business Asset Disposal Relief is applicable to various disposals, including assets of a sole trader, interests in a partnership, trust assets, and shares in a private trading company.

Businesses looking to buy or sell ahead of the introduction of any new measures should visit Clarke Willmott’s specialist legal advice on business exit strategy and sales page.

Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton, and Taunton.