Why Consider An MVL Ahead Of The Autumn Budget 2024?
Chancellor Rachel Reeves recently confirmed that the upcoming Autumn Budget will be taking place on October 30th 2024. With a £22bn public finances shortfall left by the last government and key election promises to meet, it is being widely speculated that this upcoming Budget will include tax rises and changes to current tax reliefs.
With these predictions in mind, businesses in the UK are already starting to prepare for the possible consequences of the Autumn Budget. One of the ways they are doing this is by considering the Members Voluntary Liquidation (MVL) process. This form of solvent liquidation involves extracting business assets and profits in a tax-efficient manner, before winding up the company for good. In this article, we have outlined why being proactive and considering an MVL now may be a sensible step for your business ahead of the Autumn Budget 2024.
Avoid Uncertainty
The costs and pledges made in the Budget can create some degree of market uncertainty which may make decision-making difficult and/or more longwinded. In fact, we have seen as recently as 2022 how decisions made by the Chancellor can significantly affect businesses in the UK, with Kwasi Kwarteng’s mini-budget wreaking long-term havoc for interest rates and inflation.
Furthermore, the first Budget of a new government is always a significant moment and an occasion used to meet election promises and set the tone for the years ahead. Given that the Chancellor has already highlighted her anger at the shortfall left by the previous government, it certainly feels like the upcoming Budget will make a statement and this could further amplify levels of uncertainty for UK businesses. Business owners already considering an MVL (for example, if retirement is on the horizon or the business is approaching the end of its useful life) may therefore be wise to consider proceeding with this solvent liquidation process now rather than waiting for the Budget to be announced. By being proactive and acting ahead of the Budget, you can be certain that the MVL process will take place as planned and not be impacted directly or indirectly by any measures announced by the Chancellor in October.
Benefit From Business Asset Disposal Relief
With this in mind, business owners are wise to consider how the Autumn Budget may directly impact Members Voluntary Liquidation. Currently, the MVL process is an incredibly tax-efficient way to extract profits from a company. The funds and assets distributed by an insolvency practitioner in an MVL are taxed as capital gains rather than income and therefore are subject to a lower tax rate. Business owners can also benefit from Business Asset Disposal Relief when extracting funds via an MVL, which reduces Capital Gains Tax to just 10%.
However, it is widely predicted that the Autumn Budget will include Capital Gains Tax rises and possible changes to Business Asset Disposal Relief. If put into place, such changes would make the Members Voluntary Liquidation Process less tax-efficient. If it is right for your business, considering and then embarking on an MVL before the Budget in October will ensure that you lock in current tax rates and reliefs when winding up the affairs of your solvent business.
Beat The Rush
If the Chancellor does announce changes to Capital Gains Tax and Business Asset Disposal Relief, there is no guarantee when said changes will come into force. We therefore anticipate that there could be a spike in businesses wishing to explore an MVL following the Budget, which could lengthen the amount of time it takes for an insolvency practitioner to guide you through the process. Get ahead of the curve and consider an MVL now to not only guarantee you can access Business Asset Disposal Relief but also to ensure that the process can take place as quickly and efficiently as possible.
Start The MVL Process Today
Taking into account the possible uncertainty of the upcoming August Budget and the predicted changes to Business Asset Disposal Relief, businesses may find it advantageous to plan and execute an MVL ahead of October. Bringing your retirement forward or determining that the business has reached the end of its life now will ensure that you get a financially favourable outcome from the MVL process and benefit from current tax rates and reliefs.
At My Liquidation, we have years of experience helping business owners extract their hard-earned wealth via an MVL and are on hand to guide you through the process ahead of the Autumn Budget. To find out more and speak to our expert insolvency practitioners, be proactive and get in touch with us today.
