Newsletter Autumn 2007
Important changes to capital gains tax announced
We highlighted in our Spring 2007 newsletter that changes to taper relief rules were being discussed.
The Chancellor, Alistair Darling announced in his recent pre-budget speech that there would be wide ranging CGT reforms which will affect disposals of companies after 6th April 2008.
It is proposed that in future there will be a single flat rate of 18% on Capital Gains above the £9200 annual personal exemption. This sweeps aside the current system of taper relief which reduced the tax rate to 10% if the business assets had been owned for at least 2 years.
The new regulations significantly affect the net sale proceeds of all private company disposals.
For example a single owner of a business that we currently sold for £750,000
(assuming at least 2 years ownership and no capital gains elsewhere) would
have paid:
£750,000 –£9200 = £740,800 gain
£740,800 @ 10% Capital Gains Tax = £74,080 tax
payable
After April 6th 2008, in similar circumstances it is suggested that the
tax bill
will be:
£740,800@
18% Capital Gains Tax = £133,344 tax
payable
This would be an increase of £59,264
Clients who are considering selling their company are strongly advised to contact us as soon as possible to discuss maximising the net sale proceeds of their business .
Thinking of Selling your Company? Contact ACF for a confidential free valuation and consultation.