Business owners in London must evaluate their company structures, especially if they plan to sell, due to rising Capital Gains Tax rates. From April, Business Asset Disposal Relief will increase to 18%, while the normal CGT rate will reach 24%. Entrepreneurs' Tax Relief has evolved to Business Asset Disposal Relief, tightening conditions, and reducing the lifetime allowance to £1m. Advising immediate action, tax experts emphasize planning for sales within the next 1-5 years to lessen tax impacts.
For many years there was a 10% effective rate of Capital Gains Tax that owner managers could benefit from on sale/retirement, but this ended on 5 April 2025, when the rate increased to 14% with the main rate of CGT having increased to 24% from 30 October 2024.
However from next April, the rate of tax where BADR applies will be 18%. In less than 10 years the CGT payable on £2m of qualifying gains has more than doubled.
#capital-gains-tax #business-asset-disposal-relief #company-structure #tax-planning #entrepreneurs-tax-relief
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