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MVLs still deliver – but timing is everything ahead of the Budget
Head of the National MVL team at Leonard Curtis, Steve Markey, urges accountants to help clients act early as Business Asset Disposal Relief rates climb 4% again from April 2026.
26th November marks Chancellor Rachel Reeves’ second Autumn Budget. With a £40 billion fiscal gap, speculation is mounting over incoming changes. While the Labour manifesto rules out raising the rates of income tax, VAT, and National Insurance (NI), other areas (including Capital Gains Tax (CGT), Inheritance Tax (IHT), and allowances) are firmly in scope.
MVLs under the spotlight
Members’ Voluntary Liquidations (MVLs) remain one of the most effective ways for shareholders to close a solvent company and extract value in a tax-efficient manner. Distributions are taxed as capital rather than income, meaning they typically fall under CGT rules rather than dividend tax. But changes introduced in the 2024 Budget are making it harder for shareholders to benefit:
- From 30 October 2024, CGT rates rose to 18% (basic) and 24% (higher) and
- The CGT annual exemption has been cut to £3,000 for individuals and £1,500 for trusts
The biggest, and most time-critical changes, relate to Business Asset Disposal Relief (BADR), which is being scaled back. For those shareholders that qualify for BADR, the CGT rates are increasing:
- Rates were 10% to 5 April 2025
- They then increased to 14% from 6 April 2025
- And will be 18% from 6 April 2026
Why timing matters
For company owners, MVLs remain cost-effective but there is a limited window of opportunity here and acting sooner rather than later could lock in significant savings.
To put it into perspective, on a £1 million gain, the difference between 14% and 18% BADR is £40,000.
When these tax changes were announced in the October 2024 Budget, there was a clear rush to lock in lower rates: our national MVL team completed a record 120 MVLs in the month leading up to the Budget and this high level of demand continued in the period to April 2025. That response underlined how sensitive owners are to rate changes, and how quickly appetite can surge when the clock is ticking.
The bottom line
MVLs remain a valuable tool and often tax-efficient solution, but for those looking at an exit timing is crucial.
Accountants who engage clients now can help them capture today’s lower rates and prepare for tomorrow’s budget changes.
If a client is considering a solvent liquidation and you would like to discuss it then please call your local LC contact or message Steve direct on steve.markey@leonardcurtis.co.uk.
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