Autumn Budget 2024 – An Insolvency Practitioners viewpoint one week on.Posted: Nov 6, 2024

Capital Gains Tax and Entrepreneurs Relief – A change as we predicted.

In our previous blog, we looked at the immediate response to the big financial questions. From the insolvency perspective though, there were a few no less important, but perhaps less generally recognised matters to deal with.

A week in, it’s time to take a deeper dive into the budget changes.

I can’t exactly claim magical precognition skills by saying that we predicted the change to Capital Gains (CG) tax before the budget. In fairness, I think anyone even remotely connected to business finance has been fully expecting it to come under the Chancellors microscope for some time. Then, once she started to talk about ‘black holes’ in the country’s finances, it seemed one of the obvious and almost inevitable casualties of the need to raise some revenue.

As we have mentioned in previous blog posts, there has been what seemed an inevitable shift towards the increase for months. We and I suspect almost every Insolvency Practice, have been working hard in solvent liquidations throughout September and October to resolve as many as possible before the budget out of fear of it having a significant impact. It became a bit of a race against time to return funds to the shareholders because of concerns about how the budget would affect them.

The other area we were concerned could receive some unwelcome attention was what is still often known as ‘The Entrepreneurs Relief ’ despite it having a name change to the more accurate, though less catchy, Business Asset Disposal Relief (BADR) a few years ago.

As the budget rolled out, I was listening for the expected announcements and some indeed came.

The Autumn Budget - What we thought could happen, what did happen and what it means.

Let’s start with the good news. We had feared that Entrepreneurs Relief would be revised to match Capital Gains or even, as some people predicted, be removed entirely. In the event, it wasn’t as bad as expected. BADR will remain unchanged but only for the moment.

What that means is that if you are entitled to it, for example, if you are exiting a business to retire, then you can claim up to £1m at a rate of 10%. Just bear in mind though that the £1m is a lifetime allowance. If you have previously claimed, then that will be taken into account and your allowance will reflect the previous transaction. It’s important not to confuse this with the lifetime limit on Investors' Relief which has now been reduced from £10 million to £1 million

From 6th April 2025 however, the BADR will move to 14% with a further change to 18% from April 2026. So, there is an adjustment coming and while it isn’t as much as many people expected, it is still an important difference. Further details of the change can be found at found on the .gov website https://www.gov.uk/business-asset-disposal-relief

As far as Capital Gains Tax goes, there were changes as expected. As of 30 October 2024, the basic rate of CGT on most assets increased from 10% to 18%, while the higher rate rose from 20% to 24%. While it perhaps isn’t as bad as it could have been, there is no getting away from the fact that that is a significant change.

So, what does all this mean to directors and shareholders moving into the next couple of years? Well, the main takeaway point is that if you are considering retirement from your business, we suggest you start doing it now to minimise the impact of the impending changes. While this roadmap for change is fixed on BADR, we should also remember that Capital Gains Tax could possibly move again. Traditionally the first budget from a new government tends to be the bad news one. However, these are difficult circumstances to judge. We are still reeling financially from the pandemic, inflation is still a little unstable, there is still a continuing global situation, and the Chancellor has been very clear that she intends to raise money. So, while we hope not, it’s not beyond the realm of possibility that another increase in CGT could happen in the next couple of years.

If you are thinking of solvent liquidation, then talk to us now.

If you want to claim in the current tax year, it is clearly time to start planning. We have a section specifically dedicated to this area. There is a lot of information on there and a handy download that will take you through the basics. That said, nothing beats a conversation on something as important as an MVL.

Bringing a solvent company to a close can be complex and involves a lot of work to ensure everything it resolved in the most efficient way. Here at Smart Business Recovery, we specialise in helping people through this process and are always happy to discuss things further. While we will do everything possible to make the process go smoothly and quickly, as we said, it is complex at times. The earlier we talk, the more likely we are to get things resolved in time.

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https://www.gov.uk/business-asset-disposal-relief The Chancellor's Autumn budget was an interesting one, to say the least. Now, a week on, the big headlines have died down, and hopefully, businesspeople are starting to reflect on how to deal with the changes.

Autumn Budget 2024 – An Insolvency Practitioners viewpoint one week on.

Capital Gains Tax and Entrepreneurs Relief – A change as we predicted. In our previous blog , we looked ... more

The Chancellor has just stepped away from the podium, and everyone is still digesting the full content of her budget. The initial question we are all left with within the business world is, ‘Practically speaking, what could it mean to my financial stability?’

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UPDATED - The Debt Relief Order (DRO) rules are changing – Better or Worse for Those in Debt?

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As we often say, HMRC can be a ‘quiet creditor’ because they don’t shout as loud or seem as urgent as other, more immediate bills.
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You will probably know that that one of the actions taken during an insolvency is for the company assets to be sold to help pay debts. This is always the case, but what constitutes an asset is sometimes a little more complex.

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The politics of a budget are not really in our area of interest, to be honest. The motivations behind decisions made in Westminster seem considerably less important than dealing with the day-to-day practicalities of what those decisions mean to business. Let’s leave the speculation about ‘why’ to the press and look at what there was in the budget that will, or won't, have an impact on your business.

Budget 2024 – Spring in the air or a wet summer ahead?

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There have been a couple of dramatic looking statistics about company closures and recessive economies recently. While it isn’t a good idea to dismiss their importance, it is worth putting them into perspective.

Closures and recessions – Are things that bad when you look behind the numbers?

There have been a couple of dramatic looking statistics about company closures and recessive economies recently. ... more

HMRC have issued an update to how Members Voluntary Liquidations (MVLs) are processed. The change is quite a shift in the administration of MVLs, so it’s worth taking a moment to look at it and what it will mean.

Changes to the Members Voluntary Liquidation process – what do they mean?

HMRC have issued an update to how Members Voluntary Liquidations (MVLs) are processed. The change is quite a shift ... more

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Christmas is around the corner, and the last bell is about to ring for 2023, so it’s a good time to sit back and look at what the year meant to business and insolvency.

Looking back on 2023 – A year of challenge for UK business

Christmas is around the corner, and the last bell is about to ring for 2023, so it’s a good time to sit back ... more

We are all aware that a business can become insolvent but what about the over 168,000 charities currently registered in the UK, can they become insolvent?

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This year the Autumn statement was a bit of a mixed bag for business and individuals. National insurance giveaways and minimum wage rises dominated the news but, looking at the bigger picture, is it a win or a loss for business?

The Chancellors autumn statement – hint of spring or cold winter ahead?

This year the Autumn statement was a bit of a mixed bag for business and individuals. National insurance giveaways ... more

A stagnant economy in the third quarter, increases in company insolvencies, rising fuel and utilities costs and many other factors are all pointing to a difficult business year ahead. Let’s not forget though, that we could be also looking at some harder times for personal finances as well.

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The jump in insolvencies in September follows a similar increase in August. However, there was a drop in July. So is this a blip or a precedent that we should be concerned about?

The increase in insolvencies – What is of root cause of the jump in numbers?

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Bankruptcy and insolvency are not the same thing, but they are closely related. Maybe that is why they are sometimes used interchangeably in the public domain. While this is understandable, it’s very important to know the difference between them.

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Much like the current summer weather, the outlook for the economy is not great. So, what should businesses be doing right now to stave off some of the effects of the economic instability?

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It often still comes as a surprise to directors when they learn that they can claim redundancy. However, the process has recently been updated so the answer to the question ‘Can I claim redundancy if I am a company director’ is not quite as simple as it used to be.

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As insolvency practitioners (IP) a lot of the work we do is rooted in procedure, experience, and good practice, but recent comments by a client about ‘wanting a local IP’ made me wonder why that was such a big deciding factor for them.

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We have been informed by the Insolvency Service that an email from a fake email address, 'info@theinsolvencyservice.co.uk' claiming to be Chris Pleass (Director) and possibly intended to build up to an attempt to defraud the agency, has been circulating.

Warning: Insolvency Service impersonation

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The recent budget may well have not been much of a shake up for the economy but it did contain some things to need to be considered by businesses in the coming months.

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You have probably seen news articles recently about Directors being disqualified over Bounce Back loans so if you have a company that is insolvent, do you need to worry?

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To be frank, it came as no surprise that the treasury recently changed the rules surrounding Capital Gains Tax. In fact, we were really surprised it didn’t happen sooner because it seemed an obvious way to raise funds and, in fairness, it had remained untouched for some time. When the change did come it was still quite a light touch but even so, anyone considering closing their solvent company through a member's voluntary liquidation has a decision to make and it needs to be made quickly.

No surprise but it still stings – Now is a good time to think about Members Voluntary Liquidation

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Normally in early January, it is time to look forward to the year to come. However, after such an unusual year, it’s probably worth taking a moment to reflect on what happened and what it could mean for business. https://www.smartbusinessrecovery.co.uk/news/50/137/More-than-knowledge-What-to-look-for-in-an-Insolvency-Practitioner

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As if the hospitality sector hasn’t suffered enough through covid and lockdowns, it is currently experiencing even more financial pressure. Sadly, according to a recent survey, it looks like insolvencies for pubs and restaurants are going to continue to be an issue into the coming year.

Less than Festive – Sharp increases in hospitality insolvencies pre-Christmas

What’s going on in Hospitality? You cannot help but feel for pubs, restaurants, and other venues. It must ... more

It isn’t unusual that a director of a company will have an outstanding director’s loan account. If that company then goes into an insolvency process, then the loan becomes an amount outstanding to the business and the insolvency practitioner is required to pursue these. Depending on the circumstances these are sometimes partially written off due to the director's personal circumstances. Under new guidelines from HMRC though, there could be a nasty surprise for the director coming

A tax to be paid – Changes to the way HMRC view writing off a director’s loan account during insolvency.

It isn’t unusual that a director of a company will have an outstanding director’s loan account. If that ... more

When you need the help of an Insolvency Practitioner for any of the services they offer, you are at the beginning of a journey that requires mutual trust and understanding. It’s important that you choose someone who you can work with whether you are looking at potential insolvency, personal bankruptcy, solvent liquidation, or any of their services.

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Wasps, the well known Coventry based rugby club, have filed the intention to appoint administrators with the high court. So, is that the end of the line for the team and its supporters?

Intent to file administration by rugby club Wasps - What does it all mean?

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All businesses have the occasional difficult time when it comes to finances. The important thing for directors is to recognise when that 'rough period' is starting to become something much more serious.

Is your business going through a bad patch or insolvent? – Red light and green lights

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There is a lot of doom-laden talk on the news at the moment. While things may not be as economically rosy as they have been in recent years, are they really as bad as they sound for you and your businesses?

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Personal guarantees can be a problem when a business becomes insolvent, and directors are often concerned about their liability. When businesses are in the start-up phase or looking to expand and grow, it isn’t uncommon for directors to sign off on a personal guarantee. While this may not be unusual it’s important to know what that could mean later.

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You can’t help but notice that the economy is not exactly rosy. Inflation is rising rapidly, and costs are going through the roof. So why are we not hearing about huge numbers of insolvency cases?

If the economy is so bad, why aren’t we seeing a flood of insolvencies?

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If you run a business, you will be more than aware of the rising background costs. You will also be facing increases in your personal finances. Without a doubt, now is the time to maximise your resilience.

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Boris Becker recently failed to reveal his full financial situation during his bankruptcy process resulting in a prison sentence for the ex-champion. Why is full disclosure of assets so important in personal bankruptcy and business insolvency?

Full disclosure matters when it comes to debts, bankruptcy, and insolvency.

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When they were launched, the Bounce Back Loans were a unique event. No security needed, no personal guarantees and just a handful of rules. Now, as the pandemic dust finally settles, some Directors are concerned about whether the BBL will turn out to be more a curse than a blessing if they are facing insolvency.

BBL anxiety - Should you be worried about Bounce Back Loan consequences?

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One of the responsibilities of an insolvency practitioner is helping people through the solvent liquidation process or Members Voluntary Liquidation (MVL). It is a big decision and timing can be a big factor. So, is now the right time to consider it?

Time for a change? If you are considering solvent liquidation, now may be the time.

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There were various techniques employed by the government to stave off the effects of the pandemic on business. Some were beneficial in the long run, others, such as the bounce back loans, are having serious repercussions for businesses that have not ‘bounced back’ as much as they hoped. Nearly all the measures aimed at temporarily offering a stay of action against insolvency have now been lifted but what does that mean for businesses?

All things come to an end – The end of temporary insolvency measures.

When the insolvency legislation was temporarily changed during the pandemic, I suspect there was a widespread sigh ... more

As we emerge from the storm clouds of the pandemic, for what is hopefully the last time, it’s worth standing back and taking a good look at how your business will adjust. There is a lot to consider because the Covid pandemic and the accompanying financial situation has created one of the most unusual business environments ever seen in the UK. In an amongst the workload and relief of getting back to some sort of normal (again!) we suggest you take the time to assess your trading situation, not from the usual angle of cashflow or forecasting, but in the light of a post-pandemic marketplace.

Once more around? – Things to think about coming out of the pandemic.

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Cashflow should always be important to any business, but as we go into an unsettled economy for 2022, it is even more important than ever.

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Yes, for those of you that watched ‘Game of Thrones’ you will appreciate that this is the threat of bad things happening. We have heard similar phrases being used in the press, such as ‘Winter of discontent, ‘Shortages’ and stories of empty shelves.

Winter is Coming!

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Having spent 30 years working with Companies in trouble we have seen this in the past, for example after the 2008 banking crisis, HMRC took the same approach only to return to their normal ways a couple of years later and in my experience, they can be even more aggressive as the demand for collections from the treasury increases.
To make matters worse given the change in legislation in December 2020, now that HMRC are preferential creditors in an insolvency, they are likely to push even harder knowing they will be top of the queue for payment if the business fails.

Beware HMRC collections will be returning to normal SOON.

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The temporary restrictions that were in place will be lifted with new targeted measures to support small business and commercial tenants introduced after 30 September 2021.

An End to the Temporary Insolvency Measures – Almost but not Completely

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When a Company fails it is quite common that directors are excused of Wrongful or Insolvent trading.
Wrongful trading, sometimes called insolvent trading, is quite a complex area to discuss and is based on the facts of each individual case so advice should be sought if you think this applies to your company.

Wrongful trading, Insolvent trading – What is it and what does it mean?

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Government Extends Help Again but are we just kicking the problem down the road?

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I the first of these BBL articles we looked at your options if you are struggling to pay your Bounce Back Loan payments. If you haven’t read that article, it may be worth reading it now because we discuss the routes available to you via the ‘Pay as you Grow’ options. In this article, we want to focus on what happens if your financial situation has progressed to a critical stage.  There is a lot of uncertainty and conflicting opinions so, we will try to answer the main points raised by the question ‘what happens if I can’t pay back my Bounce Back Loan’?

What to do about your Bounce Back Loans (BBLs) Part 2 – What if you cannot pay it.

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Bounce Back Loans are becoming a big problem area and we may only be scratching the surface of the impact they may well have on business. Thinking back to when they were first announced, they may not have been the covid response many limited companies wanted, but they did potentially offer a stop-gap solution.

What to do about your Bounce Back Loans (BBLs) – Part 1

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The Government has announced a new scheme to help individuals with debt problems. The scheme is described as ‘Breathing Space’ and comes into effect on 4 May 2021.

New Scheme Announced for Individuals with Debt Problems.

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I also think it is fair to say that Pre-Pack sales by an Administrator have had a high level of press coverage. All the evidence suggests that a Pre-Pack sale commonly leads to a better return to creditors than a forced sale shut down. But equally, creditors are understandably concerned because the sale is conducted very quickly following the appointment of the Administrator and often, they are the last people to hear about it. This concern is always worse when the sale is to a connected party.

Pre-Pack Sales to Connected Parties – The New Evaluator Process

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The Insolvency Service produces monthly figures for both corporate and personal insolvencies and as mentioned previously, I rarely comment on them. Partly because insolvencies are seasonal, so generally increase in the first and third quarter of the year and decrease in the second and fourth quarter and partly because there is not much to talk about.

Latest Insolvency numbers are released for March 2021.

The Insolvency Service produces monthly figures for both corporate and personal insolvencies and as mentioned ... more

The answer to the question ‘when is a good time to close your solvent business’ is never an easy one. However, with capital gains tax and asset disposal relief both still working in your favour, if you are looking to close your solvent business then 2021 or early 2022, may well be the time to make the move. If not, you could see a much less favourable tax landscape in the future.

Good news for those planning a Members’ Voluntary Liquidation (MVL)

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On 24 March 2021, the Government announced that it will extend several temporary measures brought in by the Corporate Insolvency and Governance Act (CIG) until 30 June 2021.

Groundhog Day - Government Extends various measures to assist struggling business

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VAT Deferrals – What can you do now if you still have not got the funds to pay?

Believe it or not, it has been almost 12 months since businesses in the UK were first given an answer to the ... more

I thought I would provide some thoughts on how the change may affect you because, despite the budget not quite producing the fireworks some were predicting, it did have a lot worth discussing in there.

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The Insolvency Service produce monthly figures for both corporate and personal insolvencies and to be honest I rarely comment on them. Partly because insolvencies are seasonal so increase in the first and third quarter of the year and decrease in the second and fourth quarter and partly because there is not much too talk about.
 
However, I feel that there is a clear trend and whilst on paper the trend appears to be good news it hides several issues which will hit the economy later in the year.

Company Insolvencies in January 2021 50% lower than January 2020, but is this good news?

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Smart Business Recovery is pleased to welcome a new member of the team

Meet Sharon – an old and new colleague.

If you have been reading our blogs or social media recently you will probably have noticed that we are very busy at ... more

Looking ahead isn't always easy but despite 2020 begin one of the most unusual years ever for many of us, there are some signs of stability ahead.

Some optimism, some hope and a big dollop of realism – Insolvency and business in 2021

I am already on the third draft of this blog. Every time I managed to get pen to paper the Covid situation or ... more

Over the last few days, a number of extensions have been announced which it is hoped to assist business affected by COVID 19. These are as follows;

Government Extends various measures to assist struggling business

Over the last few days, a number of extensions have been announced which it is hoped to assist business affected by ... more

Will I get my money? The order of payment for creditors.

There is no such thing as a simple way to close a business. Whether it is an administration or a liquidation, the ... more

What’s left for you? What will the change to HMRC preferential creditor status really mean to SMEs?

Up until the early 2000s HMRC were a preferential creditor in cases of insolvency. When this changed in 2003 it was ... more

The Government Announces new rules regarding Pre-pack sales to be implemented.

The Government has announced that new rules will be brought into legislation as soon as possible. The following was ... more

Measures put in place to protect businesses from insolvency will be extended to continue giving them much-needed breathing space during the coronavirus (COVID-19) pandemic, the government announced today (24 September). UPDATED 27 November 2020

Government gives businesses much-needed breathing space with extension of insolvency measures

UPDATED 26 NOVEMBER 2020 The Government has announced extensions to previous temporary measures relating to ... more

Taking stock – Are your customers stock levels a threat to your cashflow?

There is a potential situation arising that could soon be causing some insolvency related issues, cashflow problems ... more

Changes to the regulations surrounding insolvency could spell trouble for SMEs. This article takes a look at what some of these changes are and the impact they could have on cashflow.

Supplier beware – Credit control and the Corporate Insolvency and Governance Bill 2020

Insolvency legislation rarely makes the news which is probably why one of the biggest changes to the way it works ... more

Dividends, Overdrawn Loan Accounts and Insolvency - Updated

This is a very common problem in insolvency and here is the reason why!! At some stage, a director of a new ... more

Keep your cashflow forecast up to date – 5 tips and 1 warning

Why then are we bothering to dedicate a full article and video to cashflow forecasts if they are so common? Well, ... more

Since the Covid-19 pandemic insolvency has been on the minds of many business owners. Pressing the panic button is unlikely to be the right response though.

Am I insolvent? – Why pressing the panic button may not be the best idea.

The initial shock of the lockdown. When the government announced the Coronavirus lockdown our telephone began to ... more

Bankrupt, Insolvent or in need of rescue?

What happens when you reach out to an Insolvency Practitioner? I doubt any business owner ... more

What are employees entitled to in an insolvency process?

One of the major aspects of any insolvency is what will happen to the employees. Any news story in relation to an ... more