The Autumn Budget is taking place on November 26th so the time for directors to act to close their business under the most favourable circumstances is right now. 

Whether they are retiring, restructuring or taking a break before pursuing new ventures, a Members’ Voluntary Liquidation (MVL) is the most efficient route but the time factor is critical. Taxes associated with an MVL are already going to increase from next year – and this is before we learn what the Chancellor has planned for businesses. 

Here’s why they need to take action to maximise their company’s value today.

1. Securing the Lowest Possible Tax Rate: The Business Asset Disposal Relief (BADR) Countdown

The primary financial advantage of an MVL is that after it is enacted, distributions of surplus funds to shareholders are treated as capital gains rather than standard income or dividends, resulting in a significantly lower tax liability.

For qualifying business owners, the key to maximum savings is Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief.

Looming Deadlines

Changes announced following the previous Autumn Budget in 2024 have set a schedule for rising tax rates, making the current period the most tax-efficient time to proceed.

To benefit from today’s most favorable rate, directors must move swiftly:-

  • April 6th 2025 Initial Increase (14%): BADR reduces the Capital Gains Tax (CGT) on qualifying gains up to a lifetime limit of £1 million. Following the Autumn Budget announcement, the BADR rate increased from 10% to 14% for disposals made on or after April 6th 2025.
  • April 6th 2026 Further Increase (18%): The rate is scheduled to rise again to 18% starting on April 6th 2026.

Delaying will mean footing a substantially higher tax bill.

2. Take Advantage of Financial Incentives

Beyond BADR, initiating the MVL process quickly offers several additional financial and procedural benefits:-

Corporation Tax Early Repayment Discounts

Companies engaging in an MVL may be eligible for an early repayment discount on Corporation Tax liabilities. With effective planning regarding the timing of payments, this discount can offer tangible savings for the company and shareholders. In some recent cases, this early settlement discount has realised more than the cost of liquidation itself, effectively resulting in a “free MVL”.

Rapid Access to Funds

MVLs are designed to be a clear and efficient method for closure. If the company has completed its preparatory tasks, the total timeline for placing the company into liquidation can often be finalised within 10 days. This fast-track structure allows for quick cash release, enabling shareholders to access their funds promptly.

3. Minimise Risk of Legislative Uncertainty

While the primary MVL tax changes are currently scheduled for April 2026, the upcoming Autumn Budget has consistent speculation around property, wealth taxes, business rates and changes to existing generous tax reliefs.

For instance, tax reliefs on pensions, such as those used in salary sacrifice schemes, are expected to be restricted in the forthcoming Budget as the Treasury seeks more revenue. 

Similarly, there’s speculation about further potential changes to Capital Gains Tax (CGT) and BADR themselves, such as bringing CGT rates closer to income tax levels or making it harder to qualify for BADR.

Although the current MVL tax increases are set, accelerating your MVL now mitigates the risk of any further unexpected negative changes that the Chancellor might announce to capital distributions or wealth extraction in the Budget. 

MVLs provide certainty and a formal, structured closure, which is invaluable when tax landscapes are constantly shifting and about to shift even further.

Final Word: MVL is a sensible strategic exit

MVL is strictly limited to solvent companies—those that can pay all debts, with interest if necessary, within 12 months. So If your business meets this crucial solvency requirement and has accumulated significant retained profits (often exceeding £25,000), it’s best positioned to benefit from the current tax rules.

MVL is not just a mechanism to close a business; it’s a strategic decision to realise the maximum value. Given the imminent financial deadlines and the possibility of new tax reforms being announced at the Budget, directors should get some impartial, professional advice to discuss their best options.

This is why we offer a free initial consultation for any director seriously considering their options. 

The MVL process requires meticulous preparation including ceasing trading, closing accounts and settling all liabilities to ensure a swift conclusion. Getting the right advice will ensure that the process is handled correctly, efficiently and quickly before the Chancellor or anybody else can change it.