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Could the 28 October Budget Change the Cost of Closing a Company?
Budget day is set for Wednesday 28 October, and speculation about tax rises has started early.
The Chancellor has emphasised fiscal discipline, while Capital Gains Tax (CGT) and capital reliefs are already among the areas attracting attention. For accountants with cash-rich owner-managed clients, the practical question is straightforward: if a client has already decided to close, is there anything that should happen before Budget day?
For solvent liquidations, the answer turns on one point that is easy to lose in the noise. In an MVL, each capital distribution is treated as a disposal for CGT purposes when the distribution is declared. It is this date (not the members’ resolution and not our appointment) that determines the applicable CGT treatment.
In October 2024, the main CGT rates changed for disposals made on or after Budget day itself. We saw a significant influx of MVLs as a result, and again ahead of the Business Asset Disposal Rate (BADR) increases in April 2025 and April 2026. Once a tax change is announced and a deadline is known, demand can increase very quickly.
If that happens again, a company that is “in liquidation” on 28 October but has not yet distributed, gains nothing.
As things stand, the main CGT rates are 18% and 24%, and BADR is 18%, subject to the £1m lifetime limit, having risen from 14% in April 2026. For many higher-rate owner-managers, capital treatment remains materially more favourable than dividend treatment, although the margin has narrowed over the last two years.
Whether the next move is to the main CGT rates, BADR or a further narrowing of the gap with income tax, nobody knows. What we do know is the tax regime applying today.
On timing: once we have the information we need, we can typically achieve appointment within one to two weeks. We can then distribute the substantial majority of funds shortly after appointment, where appropriate, using deeds of indemnity to minimise unnecessary retentions.
If a pre-Budget distribution is important, we recommend having the final figures and completed questionnaire with us by 30 September. We cannot guarantee a pre-Budget distribution for cases received after 30 September.
Clients worth having a conversation with now:
- companies that have sold their trade or assets and are holding the proceeds;
- owner-managers who have already decided to retire or step back; and
- cash-rich owner-managed companies where trading has ceased and surplus funds are awaiting extraction.
We are not suggesting clients should liquidate companies they were not otherwise planning to close. But where the commercial decision has already been made, it makes sense to consider the timing now rather than wait until after the Budget.
You look after the tax advice and numbers; we deal with the liquidation itself, with fees agreed at the outset and a timetable agreed before appointment.
If you have clients weighing this up, please contact Steve Markey, director of the Leonard Curtis National MVL Team steve.markey@leonardcurtis.co.uk
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Leonard Curtis is a trading style of Reach Commercial Finance Limited, registered at Riverside House, Irwell Street, Manchester, M3 5EN. Company Register number is 09056450. Reach Commercial Finance Limited is authorised and regulated by the Financial Conduct Authority, FRN: 753686. Reach Commercial Finance Limited is an authorised credit broker and not a lender. We work with an unrestricted number of lenders to find a potentially suitable arrangement for your consideration. ICO registration ZA069234 and you can check via www.ico.org.uk. We will receive commission from lenders. Different lenders pay different amounts depending on different commission models. For transparency we work with the following commission models: fixed fee, fixed rate of commission, percentage of the amount you borrow and rate for risk (this is based on the risk profile of the business). Further details of the commission model, calculation and amount will be disclosed to you throughout your customer journey. Privacy notice.
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