UK business owners in a hurry to sell stakes over capital gains tax concerns

Accountants, financial advisors and brokers nationwide say they have been inundated with calls from business owners preparing to sell down stakes in businesses ahead of any potential increase in capital gains tax in 2021. Selling a business worth £5m at current capital gains tax rates would see a business owner pay £900,000 in tax – equating to a 10% CGT rate on the first £1m and a further 20% on the remaining £4m. However, if Capital Gains Tax and income tax rates were aligned and business asset disposal relief scrapped, an additional rate income taxpayer would pay CGT at 45% on the £5m business – a total of £2.25m

Increasingly optimistic outlook from SMEs

A report by the MBH Corporation has revealed that many UK SMEs are optimistic for the near future despite the continuing effects of the pandemic. 12% of businesses surveyed described the outlook for their business as ‘very positive’ for the next 2 years, whilst a further 40% were ‘positive’. By contrast, only 4% viewed their business outlook for the next two years as being ‘very poor’. Perhaps surprisingly, for 2020 57% expected to either turn a profit or break even, with 8% of those surveyed believing they will make a ‘big profit’. MBH chief executive Callum Laing said: “This research is really pleasing for us to see as it clearly reflects the optimism at play in the UK SME market and highlights the scale of opportunities available for investors here as these smaller companies can be nimbler and more innovative in responding to the challenges at play this year”

And on a positive note…

Lockdown boom for Scottish Dairy

A dairy has created 100 jobs to meet a rise in demand for doorstep deliveries since lockdown measures were first introduced in March. McQueens Dairies said the business have seen their business grow by almost 30% since March and recruited more drivers to deliver milk and fruit juices. “We have witnessed significantly faster growth as people demanded safer and reliable doorstep delivery services” said chairman Mick McQueen. The Glasgow based family firm has depots in Scotland and the north of England and has opened a 6.5 acre dairy in East Kilbride.

No cut backs for Sheffield scissor firm

The worlds oldest scissor firm has seen a boom in sales – all thanks to people turning their hands to craft making and tailoring during lockdown. Sheffield based William Whiteley and Sons – which sells scissors starting at £25 – has been trading since 1760 and production has not stopped throughout numerous recessions, world wars and global pandemics. This year it has seen it’s online sales increase 5 fold. Boss Sally Ward, the 11th generation of the family to run the company – said “There has been a big change in the way people do things in the UK”

On a realistic note…

PKF Francis Clark on Rishi Sunak’s take

Rishi Sunak made a point that Insolvencies are down compared to last year, 2019 being the highest level of insolvencies in a year since 2013. Yes this is true, insolvencies are down but they are artificially down as a result of the protections and measures put in place by government to help businesses. Only when these support measures and protections eventually come to an end, combined with repayment of CBILS, BBLS and debts deferred during the first lockdown will the true impact of insolvencies be realised, this is likely to be in Q2 2021. The closer a company gets to a crisis the fewer options available to rescue a business.

Companies often approach us to sell their business when it is too late; a conversation early on can pay dividends.

As always, good luck with everything, stay safe and if we can help in any way we’re happy to do so.

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*Sources: Scott Bebbington; PKF Francis Clark, NACFB, The Metro

Published On: November 27th, 2020 / Categories: Business, finance /