If you’re planning to dissolve your company in the next 2-3 years, there could be a potential change in Capital Gains Tax which would impact the amount of money you can extract.

Following the publication of the Prime Minister’s tax return, which revealed he earned nearly £5 million in three years paying 22% in tax, senior Labour figures have suggested a significant change to the capital gains levy is needed.

Should Labour win the next UK General Election, we could see a large increase in Capital Gains Tax, potentially as high as 45% for higher rate tax payers. Exact details on policies won’t likely be revealed until closer to the election.

What a rise in Capital Gains Tax could mean

There are changes to Capital Gains Tax already in place to reduce the annual exempt amount; it will reduce from £12,300 to £6,000 in 2023/34, and then to £3,000 in 2024/25.

If the rate of capital gains was aligned with current higher rate of income tax then the amount of capital gains tax paid would be doubled.  

There is no doubt these changes will significantly impact the value that can be extracted from assets and those affected should be considering the timing of any disposal very carefully.

What tax payers can do today

The next General Election might be 12 months or more away but those who are likely to be impacted should start considering their options today.  Should Labour win the next election, the window to pay capital gains at the current rate could be very tight.

If dissolving your company is in your plans over the next few years, now is probably the most preferential time to do so.

At TruSolv, we can help you to liquidate your company through a Members’ Voluntary Liquidation or MVL. An MVL is often the most tax efficient way to close a company and extract its assets.

Contact us today on 0808 196 8676 or email help@trusolv.co.uk to find out more.