As UK insolvency rates reach a 20-year peak, insolvency experts at Clarke Bell warn that the forthcoming Autumn Budget may force more businesses into liquidation. Scheduled for 30th October 2024, the Budget is expected to bring tax changes and spending cuts that could further burden small and medium-sized enterprises (SMEs).
Currently, businesses are three times more likely to face liquidation than before the pandemic, and Clarke Bell encourages directors to act promptly by considering Creditors’ Voluntary Liquidation (CVL) or Members’ Voluntary Liquidation (MVL) to avoid worsening financial distress.
With the Autumn Budget drawing near, UK businesses face rising uncertainty. Increased operational costs, high interest rates, and inflation are making it harder for business owners to stay afloat. Confidence in the business sector has already dropped by 1.7% in 2024.
Anticipated government measures include:
- Changes to Capital Gains Tax (CGT), potentially aligning it with income tax and reducing relief options.
- Possible hikes in Employer National Insurance contributions, further driving up operating costs.
John Bell, Licensed Insolvency Practitioner, Fellow of the ICAEW, and Senior Partner at Clarke Bell, said:
“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 looking to close down, Clarke Bell’s Members’ Voluntary Liquidation (MVL) service offers a tax-efficient exit strategy. However, with potential changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR), delaying closure could result in higher tax bills for owners.
John Bell added:
“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 companies dealing with unmanageable debt, Clarke Bell’s Creditors’ Voluntary Liquidation (CVL) service offers a structured, responsible solution for closing down while allowing directors to protect themselves from legal actions.
John Bell explains:
“We’ve seen an increasing number of directors reaching out for 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.”
With the Autumn Budget approaching, Clarke Bell continues to provide expert guidance to help businesses navigate these turbulent times, offering both MVL and CVL solutions to suit the needs of solvent and distressed companies alike.
