CGT – selling a business before the budget?

CGTWhile I’m not usually a fan of the tax tail wagging the commercial dog, last month’s proposals for radical change to the CGT regime by the Office of Tax Simplification caught my eye. Abolition of Business Disposal Relief and alignment of CGT rates with income tax could have a huge impact on the outcome of a business sale for entrepreneurs. While there is no certainty that these proposals will become reality, they are focusing some minds.

However each situation differs. Here are some thoughts to help you think about the pros and cons of selling before the next budget.

What price will I receive?

Finding a suitable buyer, agreeing terms and doing a deal often takes many months and sometimes years. To what extent would doing a deal quickly impact on the price?

Leaving aside tax, is now a good time to sell the business?

There are considerations outside CGT.  Strategically it is now the right time to sell?  Maybe the price could be significantly enhanced by further work on the business? There may also non financial considerations, the article Is now the right time to sell my business? gives further information.

Will I realistically get the deal over the line?

Even in normal circumstances the deal process tends to be time consuming and intrusive. At the same time the business will need to be kept on track. Problems in due diligence can lead to a price chip or the deal falling over. Will the business be able cope with the demands of due diligence in a short timescale?

Wrapping up

In some cases it will not be sensible to sell now or it may not be practicable to get a deal over the line before the budget (or at least one at a sensible price). Businesses that are already in sale mode and talking to a potential buyers are likely to be best placed to accelerate a sale.

There are lots of considerations and there’s no one size fit all answer. However if you are thinking about selling it’s especially important to get good professional advice to give yourself the best shot. This includes dealmakers, lawyers and perhaps someone like me to help you get through financial due diligence as quickly as possible; if you’d like to find out more it would be worth reading Getting deals over the line – vendor assistance. 

David Lewis 1/12/20

This article is for general information and interest and may not be comprehensive. Specific circumstances will also vary.  Neither Camrose Consulting Ltd nor the author accept responsibility for any loss arising from any person or organisation acting or refraining from acting based on information or opinions contained herein.

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