As UK insolvency rates reach a 20-year peak, Clarke Bell, a leading insolvency firm, cautions that the Autumn Budget could exacerbate financial pressures on businesses, pushing many more towards insolvency. Scheduled for 30th October 2024, the Budget is anticipated to introduce new tax policies and spending reductions that may particularly impact small and medium-sized enterprises (SMEs), potentially leading to a surge in business liquidations.
With businesses currently three times more likely to face liquidation than before the pandemic, Clarke Bell advises company directors to take pre-emptive action, considering options such as Creditors’ Voluntary Liquidation (CVL) or Members’ Voluntary Liquidation (MVL) to address financial concerns.
The approaching Autumn Budget brings mounting uncertainty for UK businesses already grappling with high operational costs, elevated interest rates, and inflation. Business confidence has dropped by 1.7% in 2024, signalling increased caution across sectors.
Expected fiscal measures may further burden struggling firms, with potential adjustments including:
- Revisions to Capital Gains Tax (CGT), possibly aligning rates with income tax and reducing available reliefs
- Potential increases to Employer National Insurance contributions, which could raise operational costs for many businesses
John Bell, Licensed Insolvency Practitioner, Fellow of the ICAEW, and Senior Partner at Clarke Bell, commented:
“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 aiming to wind down, Clarke Bell offers a tax-efficient solution through its Members’ Voluntary Liquidation (MVL) service. However, with likely changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (previously Entrepreneurs’ Relief) in the forthcoming Budget, delaying liquidation could result in increased tax liabilities for business owners.
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 facing unsustainable debt, Clarke Bell’s Creditors’ Voluntary Liquidation (CVL) service provides a structured and responsible approach to closing operations, allowing directors to manage the process while protecting themselves from legal repercussions.
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.”
As the Autumn Budget approaches, Clarke Bell remains a source of expert guidance for businesses navigating these difficult times. Whether assisting solvent companies seeking an efficient MVL closure or supporting financially distressed firms considering CVL, Clarke Bell is committed to helping directors find the best path forward for their businesses.