Increasing Capital Gains Tax is an easy target in the wake of COVID-19 for the Spring 21 budget.
“The Office of Tax Simplification reported to the Chancellor this week on Capital Gains Tax (“CGT”). A sage insider said:” The OTS only reports this quickly if something is going to happen”. CGT is an easy target in the wake of Coven-19 expenditure as so few tax payers pay it (not many votes to lose), only 0.9% of all tax payers last year but the sums paid can be huge:
“Politically, it is a very easy move for the government to raise CGT and sends the right message that the wealthy — who pay CGT — are taking on a higher tax burden.” FT.com
Cash flow is strong at many dental practices under Cover-19 so potential sellers are sitting on their hands. However, with CGT rates on business assets likely to increase sharply, credibly by more than double (20% to 45%). If your gain is below £1m, don’t assume safety as reliefs are targeted for reduction and the rate for Entrepreneurs Relief will rise with CGT rates. It is a brave seller who holds on to see what happens, especially with valuation multiples nearly at pre-Covid-19 levels. It is still possible to complete a sale before the new tax year but you will need a buyer with funding and proven ability to transact very quickly.
Contact Business Development Manager, firstname.lastname@example.org if you need a well funded acquisition partner to make sure that you that you can beat the tax rise.