LONDON, UK. 23rd October, 2024 - As UK insolvency rates hit a 20-year high, Clarke Bell, a leading insolvency firm, warns that the upcoming Autumn Budget could push even more businesses into financial distress. The Budget, scheduled for 30th October 2024, is expected to introduce tax changes and spending cuts that could trigger a wave of liquidations, particularly among small to medium-sized businesses (SMEs).
With businesses already three times more likely to enter liquidation compared to pre-pandemic levels, Clarke Bell urges company directors to take swift action by exploring options such as Creditors' Voluntary Liquidation (CVL) and Members' Voluntary Liquidation (MVL) before it's too late.
With the Autumn Budget nearing, UK businesses are facing increasing uncertainty. Rising operational costs, high interest rates, and inflation are putting immense pressure on owners. Business confidence has already dropped by 1.7% in 2024.
The government is expected to introduce fiscal measures that could further strain struggling companies, including:
- Changes to Capital Gains Tax (CGT), potentially aligning it with income tax rates and reducing available reliefs.
- Possible increases to Employer National Insurance contributions, raising operating costs for 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 looking to close down, Clarke Bell’s Members' Voluntary Liquidation (MVL) service offers a tax-efficient solution. However, with potential changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (previously called Entrepreneurs' Relief) in the upcoming Budget, delaying the process could lead to higher 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 way to close down operations. Directors can take control of the situation while protecting themselves from legal action.
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 continues to provide expert advice to businesses navigating these challenging times. Whether a company is solvent and looking to close efficiently through MVL, or facing financial distress and needing to explore CVL, Clarke Bell remains committed to helping directors find the best solution for their circumstances.
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