Labour Plans

Insights by Peter Watson.

Sitting with a past client at lunch recently the conversation drifted inevitably toward the upcoming election.
He mentioned that he would be voting Labour for the first time – perhaps not surprising given the polls show such an emphatic lead and it would be a very brave person to predict any outcome other than a convincing Labour win.

So, given this is the likely outcome, what are the implications for business, and more specifically those looking to sell their businesses?

The primary concern is over Business Asset Disposal Relief (BADR) – formerly Entrepreneurs Relief. Subject to certain conditions, this can reduce the CGT due on the first £1m of Consideration from 20% to 10%. It has been scaled back successively by the current government – it used to have £10m lifetime gains limit! Rachel Reeves, the current shadow Chancellor, has given indications that the main rate of Capital Gains Tax will not be increased, though it is possible that they could further reduce the lifetime limit of the BADR, increase the lower CGT rate applicable to the BADR, or indeed cancel it altogether. It does however seem an unlikely first step, given the former association with “entrepreneurs” and negative press than might yield.

There has also been some talk in the past about equalizing Capital Gains and Income Tax. However, this would be a substantial step (a “brave” decision perhaps in the words of Sir Humphrey!*) and seems far from certain, at least initially given the generally cautious approach to date.

No, we suspect the environment for exiting business owners will remain largely as it is currently, whatever the outcome at the polls, at least for the first term!

If you do wish to sell your business in the next few years we are hosting a virtual seminar next month that will help you to increase its value. Find out more and register here: www.prismcorporatebroking.com/seminars

And finally, if you haven’t yet got your copy of our latest M&A report for the software & IT services sector then you can request it by replying to the newsletter email or completing the form here: www.prismcorporatebroking.com/report

*A character in the ’80s TV shows Yes Minister and Yes, Prime Minister.