UK insolvency rates are at a two-decade high, and Clarke Bell, a leading insolvency firm, warns that the upcoming Autumn Budget could push even more companies into liquidation. Set for 30th October 2024, the Budget is expected to include tax hikes and spending reductions that may exacerbate financial struggles for small and medium-sized businesses (SMEs).
Businesses are already three times more likely to face liquidation compared to pre-pandemic levels, and Clarke Bell is advising directors to consider options such as Creditors’ Voluntary Liquidation (CVL) and Members’ Voluntary Liquidation (MVL) before their situation worsens.
With the Autumn Budget looming, UK businesses face mounting pressures. High operational costs, interest rates, and inflation are taking their toll, and business confidence has fallen by 1.7% this year.
Potential fiscal changes expected from the government include:
- Modifications to Capital Gains Tax (CGT), potentially aligning it with income tax and limiting relief options.
- Likely increases to Employer National Insurance contributions, raising overall costs for businesses.
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 businesses planning to close, Clarke Bell’s Members’ Voluntary Liquidation (MVL) service offers a tax-efficient way to wind down. However, with possible changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR), delaying may lead to higher tax liabilities.
John Bell continues:
“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 offers an organised and responsible path to closure, allowing directors to take control and protect themselves from legal claims.
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.”
With the Autumn Budget fast approaching, Clarke Bell remains committed to guiding businesses through these difficult times, providing tailored advice for both solvent and distressed companies.
