Whether you have been planning to close down your company or fear that as a result of the pandemic that your company may fail in the months to come, then now is the time to act before it’s too late, comments Nick Nicholson, Insolvency Partner at Haslers
The specialist insolvency and recovery team at Haslers is calling on directors and shareholders of companies stuck with difficult decisions about their future to think about the tax implications of winding up.
With the Chancellor’s next Budget just on the horizon on 3 March 2021, and rumours of changes to the capital gains tax rules, the team at Haslers believes that businesses and shareholders should review their holdings with regards to Business Asset Disposal Relief.
This relief, previously referred to as Entrepreneurs’ Relief, allows owners and shareholders a lower rate of capital gains on the disposal of their business interest.
Thanks to the relief, shareholders pay tax at a rate of 10 per cent, which is lower than the typical Capital Gains Tax rate of 20 per cent and much lower than what they would pay on dividends or income.
Business Asset Disposal Relief is currently available for individuals up to a lifetime amount of £1,000,000. However, to benefit from this the company must have ceased trading in the last three years, with the shareholder(s) claiming relief having held at least five per cent stake in the company and have been a director of the company for at least two years. They must also not start a similar business within 2 years of the distribution.
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By GlobalDataMany businesses are in effect hibernating while the pandemic continues, using the Government support available to keep things ticking over.
Whilst many businesses may have ambitions of rebuilding and recovering once restrictions are lifted, their future viability may be uncertain at this time. It may, therefore, be beneficial for some companies to cease trading now and benefit from the current rule.
This can be done as long as the money from the tax relief isn’t re-invested into a similar business within two years of the initial distribution.
It is important that business owners and shareholders took take tax and insolvency advice at the time, as there is the possibility of rule changes within the budget.
Haslers tax, insolvency and recovery teams are supporting business owners and shareholders to claim the appropriate tax reliefs related to the closure of a business.
The specialist insolvency and recovery team at Haslers is calling on directors and shareholders of companies stuck with difficult decisions about their future to think about the tax implications of winding up.
With the Chancellor’s next Budget just on the horizon on 3 March 2021, and rumours of changes to the capital gains tax rules, the team at Haslers believes that businesses and shareholders should review their holdings with regards to Business Asset Disposal Relief.
This relief, previously referred to as Entrepreneurs’ Relief, allows owners and shareholders a lower rate of capital gains on the disposal of their business interest.
Thanks to the relief, shareholders pay tax at a rate of 10 per cent, which is lower than the typical Capital Gains Tax rate of 20 per cent and much lower than what they would pay on dividends or income.
Business Asset Disposal Relief is currently available for individuals up to a lifetime amount of £1,000,000. However, to benefit from this the company must have ceased trading in the last three years, with the shareholder(s) claiming relief having held at least five per cent stake in the company and have been a director of the company for at least two years. They must also not start a similar business within 2 years of the distribution.
Many businesses are in effect hibernating while the pandemic continues, using the Government support available to keep things ticking over.
Whilst many businesses may have ambitions of rebuilding and recovering once restrictions are lifted, their future viability may be uncertain at this time. It may, therefore, be beneficial for some companies to cease trading now and benefit from the current rule.
This can be done as long as the money from the tax relief isn’t re-invested into a similar business within two years of the initial distribution.
It is important that business owners and shareholders took take tax and insolvency advice at the time, as there is the possibility of rule changes within the budget.
Haslers tax, insolvency and recovery teams are supporting business owners and shareholders to claim the appropriate tax reliefs related to the closure of a business.
The specialist insolvency and recovery team at Haslers is calling on directors and shareholders of companies stuck with difficult decisions about their future to think about the tax implications of winding up.
With the Chancellor’s next Budget just on the horizon on 3 March 2021, and rumours of changes to the capital gains tax rules, the team at Haslers believes that businesses and shareholders should review their holdings with regards to Business Asset Disposal Relief.
This relief, previously referred to as Entrepreneurs’ Relief, allows owners and shareholders a lower rate of capital gains on the disposal of their business interest.
Thanks to the relief, shareholders pay tax at a rate of 10 per cent, which is lower than the typical Capital Gains Tax rate of 20 per cent and much lower than what they would pay on dividends or income.
Business Asset Disposal Relief is currently available for individuals up to a lifetime amount of £1,000,000. However, to benefit from this the company must have ceased trading in the last three years, with the shareholder(s) claiming relief having held at least five per cent stake in the company and have been a director of the company for at least two years. They must also not start a similar business within 2 years of the distribution.
Many businesses are in effect hibernating while the pandemic continues, using the Government support available to keep things ticking over.
Whilst many businesses may have ambitions of rebuilding and recovering once restrictions are lifted, their future viability may be uncertain at this time. It may, therefore, be beneficial for some companies to cease trading now and benefit from the current rule.
This can be done as long as the money from the tax relief isn’t re-invested into a similar business within two years of the initial distribution.
It is important that business owners and shareholders took take tax and insolvency advice at the time, as there is the possibility of rule changes within the budget.
Haslers tax, insolvency and recovery teams are supporting business owners and shareholders to claim the appropriate tax reliefs related to the closure of a business.
