Tax Hikes?
This is BAD news – to be clear this is news about Business Asset Disposal (BAD) rate relief.
Earlier this year Entrepreneurs Relief was changed to BAD rate relief. This change also meant the 10% tax rate reduced from £10 million to £1 million per person on assets being disposed of. Asset disposals above £1 million will be taxed at the Capital Gains Tax (CGT) rate of 20% or higher.
This is where we stand at present, anything else is conjecture on the government’s plan for the future.
There is talk of the BAD rate relief being abolished and increasing the CGT rate – the bottom line is we don’t know if this will happen or not until March 2021. At present I feel that it would be a heavy penalty if they decided to abolish the BAD rate relief of 10% and also increase the CGT rate.
Over the last decade, Government has helped UK entrepreneurs flourish by offering Capital Gains Tax (CGT) reduction through Relief (now BAD rate relief). Capital gains are generated on sale of assets (business, commercial property etc.), which are currently taxed at 20%. With BAD, disposal of assets up to the value of £1 million are taxed at 10% and all sale proceeds over this figure are taxed at 20% or higher.
Given that any changes made would likely remain for many years to come so it would follow that anyone considering selling their dental practice get the ball rolling now. There is minimal benefit in delaying in my opinion.
Written by Andy Acton
