Tax Increase for Vendors
04-12-2007 Back to news index
On 9 October 2007 Alistair Darling, the Chancellor of the Exchequer announced that the Capital Gains Tax would increase for small and medium sized businesses. These changes will have a huge impact on practice owners who sell their practice after 6 April 2008.
Capital Gains Tax is the tax that you pay when you sell any asset which is worth more now than when you first acquired it.
The Chancellor told parliament that from next April he will withdraw Capital Gains Tax taper relief and increase the tax rate from 10% to 18%. Many practitioners who have worked hard to build up their practice over the years will now end up paying significantly more tax from 6 April 2008 as a result.
A typical owner managed practice could save around £12,000 in tax if they sold their practice before the changes are put into place. The saving for larger firms will be even greater.
The impact of these changes means many practitioners who are considering selling in the next two years may decide to sell now to avoid coughing up the increased tax. By moving the sale of their practice forward they will benefit from the existing 10% tax and the taper relief.
For more information please contact Sarah Winterbottom.