As UK insolvency rates soar to a 20-year high, Clarke Bell, a leading insolvency firm, warns that the upcoming Autumn Budget could push more businesses into liquidation. The Budget, scheduled for 30th October 2024, is expected to introduce tax increases and spending cuts that could hit small and medium-sized enterprises (SMEs) the hardest.
Businesses are currently three times more likely to enter liquidation than before the pandemic, and Clarke Bell is advising directors to act quickly by considering Creditors’ Voluntary Liquidation (CVL) or Members’ Voluntary Liquidation (MVL) before financial distress worsens.
With the Autumn Budget approaching, businesses across the UK are grappling with rising operational costs, high interest rates, and inflation. Confidence in the business sector has already fallen by 1.7% this year.
The government is expected to introduce new fiscal measures, including:
- Changes to Capital Gains Tax (CGT), which may align it with income tax and reduce available reliefs.
- Possible increases in Employer National Insurance contributions, further driving up business 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 companies planning to close down, Clarke Bell’s Members’ Voluntary Liquidation (MVL) service provides a tax-efficient solution. However, with potential changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR), delaying could result in higher tax liabilities for business owners.
John Bell further explains:
“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 struggling with unsustainable debt, Clarke Bell’s Creditors’ Voluntary Liquidation (CVL) service offers a responsible, structured way to wind down, allowing directors to protect themselves from legal action.
John Bell concludes:
“We’ve seen an increasing number of directors seeking 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.”
As the Autumn Budget draws closer, Clarke Bell remains committed to providing expert advice and support to businesses, whether they are solvent and planning to close through MVL, or facing financial difficulties and considering CVL.
