Wbg, one of Scotland’s leading independent specialist accounting, tax, and audit firms, is advising shareholders planning on using Business Asset Disposal Relief (BADR) through a Members Voluntary Liquidation (MVL) process to consider acting sooner rather than later.

The advice follows figures from the Office for National Statistics (ONS) showing that UK government borrowing hit a higher than expected £3.1bn in July prompting speculation that Chancellor Rachel Reeves might raise Capital Gains Tax (CGT) in her first budget on 30 October.

MVLs typically allow shareholders to take advantage of BADR, which reduces the rate of Capital Gains Tax (CGT) to 10% on distributions made to shareholders by the liquidator during the MVL process.

Craig Allison, associate director in Wbg’s insolvency team, said: “Whereas the term ‘liquidation’ typically has negative connotations this is generally not the case with an MVL where it can be used when a company reaches the end of its natural lifecycle as a means of distributing reserves in a tax efficient manner to shareholders.

“In an MVL process there is typically a cash balance to distribute – from tens of thousands of pounds to millions – so the reduced CGT rate of 10% can be significant.

“The chancellor has been very quiet on her intentions with regard to CGT and has not ruled out a rise on the rate, or when this could happen.

“This could potentially have a negative impact on shareholders of companies considering putting their company through an MVL process.

“If shareholders are planning on using the BADR through an MVL process, they may wish to act sooner rather than later if they consider it likely that the chancellor will raise CGT in her first budget in October.

“I would urge any such shareholders to contact their professional advisor for advice.”

ENDS

For further information please contact Craig Allison on 0141 566 7000

Issued on behalf of Wbg by Liquorice Media tel 0141 332 4935 www.liquorice-media.com

Date: 22 Aug24