2016 UK Budget – Good News for M&A

George Osborne presented his 2016 budget yesterday and no doubt you will have read articles and emails covering the salient points.  But how does this affect business sales and acquisitions?

According to Avondale, “positively because Capital Gains Tax (CGT) will reduce from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers.

“More importantly, contrary to much speculation about negative changes to Entrepreneurs Relief, (which reduces CGT to 10% on the sale of qualifying business assets) it has been extended to family members to allow for easier family succession in privately owned business. Perhaps of greater surprise to many commentators, he has also extended this to investors in qualifying businesses, whereas previously the relief was only available to officers or employees of a company holding shares in it, although this group has a longer qualifying period of three years.

“This is encouraging those seeking a business exit as they stand to pay less tax on a company sale. This combined with the current highly active M&A market, which is driving both deal values and volumes makes this a lucrative time to consider a business sale.

“Reducing tax liabilities and achieving optimum exit value takes careful, advance planning. Talk to us, in confidence, about your objectives.”