With UK insolvency rates reaching a 20-year high, Clarke Bell, a prominent insolvency firm, has warned that the forthcoming Autumn Budget could lead to a rise in business liquidations. The Budget, set for 30th October 2024, is expected to introduce new tax measures and spending cuts, which could place even greater financial pressure on small and medium-sized enterprises (SMEs).
Businesses are currently three times more likely to enter liquidation compared to pre-pandemic levels. Clarke Bell urges directors to consider Creditors’ Voluntary Liquidation (CVL) or Members’ Voluntary Liquidation (MVL) before their financial situation worsens.
With the Budget fast approaching, UK businesses are already facing growing uncertainty. Rising operational costs, high interest rates, and inflation are putting immense strain on owners, and business confidence has fallen by 1.7% this year.
The government is expected to introduce fiscal measures that could worsen the situation for businesses, including:
- Changes to Capital Gains Tax (CGT), potentially aligning it with income tax and reducing available reliefs.
- Potential increases in Employer National Insurance contributions, adding to operational costs.
John Bell, Licensed Insolvency Practitioner, Fellow of the ICAEW, and Senior Partner at Clarke Bell, remarked:
“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 looking to close, Clarke Bell’s Members’ Voluntary Liquidation (MVL) service offers a tax-efficient way to wind down. However, with expected changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR), business owners may face higher tax bills if they delay the process.
John Bell adds:
“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 burdened with unsustainable debt, Clarke Bell’s Creditors’ Voluntary Liquidation (CVL) service provides an organised and responsible way to wind down operations, allowing directors to protect themselves from legal consequences.
John Bell concludes:
“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.”
As the Autumn Budget approaches, Clarke Bell continues to provide expert advice to help businesses navigate these challenging times, offering both MVL and CVL solutions to meet the needs of solvent and struggling companies.
