You can outsmart Rishi on MVLs but only if you act quickly
For most people, guessing what the Chancellor will announce in his budget and how it will affect them is a diverting parlour game.
Making a couple of pounds here and being offset by losing a couple there is how it usually goes. Online calculators and tools let people try their own hand at opening the red box and making some of the intricate calculations and seeing what the consequences could be.
It can be fun to be a sim Chancellor but if you’re a business owner or director, however, the consequences can be a lot more drastic and expensive in real life.
For instance, one area that will be getting a lot of attention and close scrutiny will be any plans for changes to Capital Gains Tax.
The government already commissioned a report that was published last year recommending a significant increase in rates – doubling them in all circumstances – and also further limiting the scope of Business Asset Disposal Relief (BADR) – the new name for Entrepreneurs Relief.
The report’s tightening recommendations included:-
- Only allowing shareholders with 25% of the business to qualify for BADR
- Requiring that these shares have been held for at least 10 years
- The claimant should be close to retirement age before they can make a claim so aged at least 55 years old.
If any or all of these recommendations are accepted and become law they’ll have a significant effect on any shareholder hoping to benefit from the Members Voluntary Liquidation (MVL) process.
Changes could come into force in a little as a month’s time so if you were considering an MVL to take advantage of BADR then there’s really no time to lose.
One thing we need to point out is that the tax point relates to the time you receive a distribution from the MVL, not when the company enters the arrangements.
So if you want to make the biggest tax saving in an MVL then you need to act before it’s too late.
If there are any changes announced in the Budget on Wednesday and you instruct us and provide the necessary required information no later than Friday 12th March 2021 then we guarantee* to facilitate the liquidation within this tax year, allowing any distributions to be made before Monday 5th April 2021 – when any new rules and changes would take effect.
We’ll show you how easy it can be to proceed swiftly and take advantage of an important benefit before it’s cut back or removed altogether.
*subject to demand and correct information being supplied in time