Welcome to the latest in our continuing series on Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR).

We’ve already looked at the history of CGT to see how and why it has developed how it has as well as what the future of CGT could look like as well as the immediate threat it could face in the near future.

Since 1993, the number of people paying Capital Gains Tax has jumped from 90,000 to 369,000 – a huge increase of 427%. 

To get an idea how much is at stake, In the 2022/2023 tax year total CGT liability stood at £14.4 billion, realising £80.6 billion in gains to claimants. 

Chris Horner, insolvency director with BusinessRescueExpert, said: “While the past 12 months show that there has been a 15% decrease in CGT liability and an 8% drop in the number of taxpayers from the previous year, the long-term increase is definitely notable. 

“In the last decade alone, the government’s CGT tax take has more than tripled from £3.8 billion. The most recent data only accounts for the 2022/23 tax year, which was the final year before the CGT annual tax-free allowance was cut, so the amount of CGT paid and the number of taxpayers liable would be expected to climb further. 

“But this is before any changes are announced in the budget. Any alignment with income tax rates or other changes to CGT or BADR will have short and long-term implications. 

“The closer we get to the end of October, the more activity we should expect as directors and investors look to realise their assets at the existing CGT rate.”

Chancellor Rachel Reeves told an international investors conference in New York earlier this month that it was vital to “strike the right balance” when it came to fiscal policy. 

She said: “We’ve got a budget on October 30th and we will set out our policy then, but it’s always important when you’re deciding tax policy to strike the right balance. 

“Of course you need to bring in the revenue to fund vital public services, but we’ve also got to grow the economy.

“If you’ve put in your own capital, if you’ve got capital at risk, I think it is right that you benefit from a more generous form of tax relief. But if it’s not your capital at risk, then it’s not right that you receive those tax breaks.

“I would like taxes on working people to be lower but I believe that you can’t make promises without being able to say where the money’s going to come from. The tax burden in the UK is at a 70-year high, which is too high.

“I want to bring that high tax burden down because I want to make Britain the best place to start and grow a business, and I want working people to keep more of their own money in their pockets, and that is what people will have with this new Labour government.”

Nobody will know for sure what the future holds for CGT and BADR until the budget is unveiled in only ten weeks time.

But you don’t need to wait until you feel rain on your face to understand what those gathering dark clouds indicated. 

The outlook for the future of these benefits to directors is definitely under threat. 

So if you are contemplating closing your solvent business to take advantage of the current arrangements then the time to act is now. 

We offer a free initial consultation to any business owner or director who would like to hear about their options including how a Members Voluntary Liquidation (MVL) could work for them. 

If this is a viable option for you then it could be completed well before the Chancellor addresses the House in October.