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.”

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, if you need a well funded acquisition partner to make sure that you that you can beat the tax rise.