Last Updated on: 23rd October 2024, 05:22 pm
As UK insolvency rates hit their highest level in 20 years, leading insolvency firm Clarke Bell warns that the forthcoming Autumn Budget could plunge more businesses into financial turmoil. The Budget, scheduled for 30th October 2024, is expected to introduce tax changes and spending cuts that may lead to a surge in liquidations, particularly among small and medium-sized enterprises (SMEs).
Businesses are currently three times more likely to enter liquidation compared to pre-pandemic figures, and Clarke Bell advises directors to consider options like Creditors’ Voluntary Liquidation (CVL) and Members’ Voluntary Liquidation (MVL) to avoid further distress.
With the Autumn Budget on the horizon, uncertainty continues to grow among UK businesses. Increasing operational costs, high interest rates, and inflation are all weighing heavily on business owners. Confidence in the business sector has already fallen by 1.7% in 2024.
The government is anticipated to introduce fiscal measures that could exacerbate existing financial pressures, including:
- Adjustments to Capital Gains Tax (CGT), which could bring it in line with income tax rates and reduce reliefs.
- Potential increases in Employer National Insurance contributions, further driving up business costs.
John Bell, Licensed Insolvency Practitioner, Fellow of the ICAEW, and Senior Partner at Clarke Bell, commented:
“With insolvency rates at record levels, the combination of existing financial pressures and new measures from the Autumn Budget could lead to a significant rise in business closures. Directors need to act now to explore their options.”
For solvent businesses planning to wind down, Clarke Bell’s Members’ Voluntary Liquidation (MVL) service offers a tax-efficient solution. However, with possible changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR, formerly Entrepreneurs’ Relief), delaying the process may result in higher tax liabilities for owners.
John Bell further explains:
“Directors planning to close their solvent companies should act swiftly, particularly in light of expected changes to Capital Gains Tax and BADR. Our MVL service ensures they can extract maximum value in a tax-efficient manner before any potential tax increases are implemented.”
For businesses struggling with unsustainable debt, Clarke Bell’s Creditors’ Voluntary Liquidation (CVL) service offers a responsible way to shut down. This option allows directors to take control while shielding themselves from legal repercussions.
John Bell adds:
“We’ve seen an increasing number of directors seeking advice on CVL. The process offers a solution for businesses that can no longer meet their financial obligations, helping directors close their companies in an orderly fashion.”
As the Autumn Budget approaches, Clarke Bell continues to offer expert guidance to businesses facing these difficult times. Whether a company is solvent and seeking to close through MVL, or in financial distress and considering CVL, Clarke Bell is dedicated to helping directors find the best solutions for their circumstances.
