Autumn Statement: CGT overhaul could accelerate business exits

Autumn Statement: CGT overhaul could accelerate business exits

The announced cuts to Capital Gains Tax (CGT) reliefs and allowances could lead to ‘bargain hunt Britain’, with transactions accelerated and cut-price deals likely as business owners seek to maximise returns ahead April 2024.

This prediction comes after Jeremy Hunt confirmed in his Autumn Statement that Annual Exempt Amount for CGT will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024.

The Chancellor also announced that dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024, while the threshold for top rate of tax will be reduced from £150,000 to £125,140.

Capital Gains Tax was widely predicted to be targeted by the Chancellor in an effort to raise up to £9bn towards the UK’s £50bn fiscal black hole. Scepticism remains about whether this can be achieved – with less than 1% of taxpayers contributing almost half (45%) of all CGT and four months in which to plan before April 2023.

With the CGT allowance set to reduce further in April 2024, we might see business owners accelerating transactions, creating a bargain hunt among British businesses and a flurry of activity in the next four months, with potential buyers able to capitalise on cut-price deals for long-term investments.

The Chancellor also confirmed the anticipated freeze on current levels of the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years, until April 2028.

Now is the right time for proprietors of owner-managed businesses to consider their long-term future and start the process of reviewing and planning family estate planning strategies.

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If you have any questions in relation to the Capital Gains Tax changes, please get in touch with a member of our specialist team or your usual Azets advisor.