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Has business asset disposal relief (BADR)been scrapped from april 25

After 22 years and working to 75  I am retiring and plan to liquidate my solvent Limited Company. I had assumed that the mainly cash assets would attract 10% corporation tax as my wife and I would have been eligible for the entrepreneurs relief. But now I am hearing that will no longer be the case due to the last budget. can anyone in the know confirm.  Many thanks for any knowledgeable input.

Comments

  • uknick
    uknick Posts: 1,729 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    It's CGT relief not corporation tax.  The budget did announce changes to the rates charged for BADR.  Whilst not scrapping it, if the rates from 2026 are the same as normal CGT, to intents it is scrapped.  

    Business Asset Disposal Relief - changes following the Budget - Payne Hicks Beach


  • Yes thanks for that clarification and sorry,  my typo on corp tax. As I now understand it, the only remaining difference will be, normal CGT adds to your taxable income potentially raising your income tax bracket whilst BADR is a fixed % whatever your income Tax status,  albeit at the normal CGT rates in a year or so. I now find I am among a que of businesses closing down before April 5th 24. My guess is it will be scrapped when they can put a bit more distance to the election manifesto promise. Hope that is not too political, just a statement of fact.
  • uknick
    uknick Posts: 1,729 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Just re-read you original post, are you intending to liquidate or sell a going concern?  I assume the latter as you're asking about BADR. 
  • mybestattempt
    mybestattempt Posts: 389 Forumite
    100 Posts Name Dropper
    edited 21 December 2024 am31 9:35AM

    My view is:

    If the intention is to sell the assets owned by the company and used in the business, then pay off all creditors leaving only a balance in the company bank account to be paid to the shareholders on voluntary liquidation then BADR is not available.

    In that scenario there are no capital gains arising to the individual shareholders, the payments to the them are distributions which are income. 

    If the shareholders (as individuals) own assets used in the company's business then disposal of those within specific time limits may attract BADR.

    When the time comes, the shareholders will hopefully take advice from their accountant to find the most tax efficient way to close the company.


  • Correct, that's what I am planning, and now having just consulted a liquidator have been assured that if we go through a  Solvent MVL we should be entitled to BADR, If not and just winding up and distributing the cash and applying to have the Company stuck off ourselves, you are probably right. it would be treated as distribution. The MVL will only cost around £3K so that is what I am doing. Not sure why the difference, one is DIY, the other costs. Just spreads the profits round the industry I guess and provides a loophole to fall through. Thanks for your sage advice!
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