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Post 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.
Post 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.
Yesterday's UK Budget did not introduce new changes to the tax treatment of Members' Voluntary Liquidations (MVLs), meaning the previously announced increases to Business Asset Disposal Relief (BADR) remain on track without further adjustment.
Business Asset Disposal Relief rates
BADR (the key relief that makes MVLs tax-efficient) is currently taxed at 14% for the 2025–26 tax year (having risen from 10% on 6 April 2025) and is scheduled to increase again to 18% from 6 April 2026. Yesterday's Budget confirmed these staged increases but did not accelerate the timeline or cut the £1 million lifetime limit.
What this means for MVL timing
- No new shock: Directors planning an MVL face the same tax landscape as before the Budget - 14% BADR now, rising to 18% next April - so the window to complete at the lower rate runs until 5 April 2026.
- Tax gap preserved: The Chancellor emphasized that the gap between Capital Gains Tax and Income Tax rates will remain significant, which keeps MVLs relatively attractive compared with extracting funds as dividends or salary, even at the higher 18% BADR rate.
- Planning urgency: If you have substantial retained profits and were considering an MVL, acting before April 2026 saves 4 percentage points (14% vs 18%), which on a £500,000 gain would be a £20,000 difference in tax.
The bottom line
MVLs remain a valuable tool and often a tax-efficient solution, but for those looking at an exit timing is crucial.
Clients wishing to lock in 14% BADR should contact the National MVL Team as soon as possible, to commence MVL proceedings in good time before BADR increases.
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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