Last month, the Office for Tax Simplification (OTS) released a report highlighting areas of disparity between Income Tax and Capital Gains Tax, recommending that these were addressed ...
Other recommendations the OTS made included abolishing Business Asset Disposal Relief, although they did say it should be replaced with something akin to the older retirement relief. This means that any tax liability realised on share sales and liquidations of Limited companies after the 5th April 2021 will be far higher than if carried out now.
Tax is currently as little as 10% where Business Asset Disposal Relief applies, but if the OTS recommendations are accepted, this could jump significantly to 45%, which is a huge increase!
Shareholders considering exiting a Limited company via sale or liquidation should be thinking of moving their plans forward to before the 5th April 2021, so they can benefit from the lower levels of taxation in this financial year.
Speak to your tax advisor if you're unsure of your tax position.
If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.