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Tuesday, November 5, 2024
BusinessUK Insolvency Crisis Looms as Autumn Budget Approaches

UK Insolvency Crisis Looms as Autumn Budget Approaches

As insolvency rates in the UK hit a 20-year peak, Clarke Bell, a leading insolvency expert, cautions that the forthcoming Autumn Budget could push even more businesses towards liquidation. Set to be unveiled on 30th October 2024, the Budget is expected to include tax changes and spending cuts that could particularly impact small and medium-sized enterprises (SMEs).

Currently, businesses are three times more likely to face liquidation than before the pandemic, and Clarke Bell advises company directors to consider alternatives like Creditors’ Voluntary Liquidation (CVL) and Members’ Voluntary Liquidation (MVL) to avoid financial catastrophe.

With the Budget looming, businesses across the UK are already facing significant challenges. Rising costs, higher interest rates, and inflation have created an uncertain environment. Business confidence has dipped by 1.7% this year alone.

The government is expected to introduce fiscal measures that could further strain struggling businesses, including:

  • Potential changes to Capital Gains Tax (CGT), aligning it with income tax and reducing available reliefs.
  • Possible hikes in Employer National Insurance contributions, increasing the operational costs for businesses.

John Bell, Licensed Insolvency Practitioner, Fellow of the ICAEW, and Senior Partner at Clarke Bell, commented:

“With insolvency rates at record levels, the combination of existing financial pressures and new measures from the Autumn Budget could lead to a significant rise in business closures. Directors need to act now to explore their options.”

For solvent businesses looking to wind down, Clarke Bell’s Members’ Voluntary Liquidation (MVL) service offers a tax-efficient way to do so. However, potential changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR) may increase tax liabilities for those who delay the process.

John Bell adds:

“Directors planning to close their solvent companies should act swiftly, particularly in light of expected changes to Capital Gains Tax and BADR. Our MVL service ensures they can extract maximum value in a tax-efficient manner before any potential tax increases are implemented.”

For companies facing insurmountable debt, Clarke Bell’s Creditors’ Voluntary Liquidation (CVL) service provides a structured and responsible way to close down, allowing directors to protect themselves from legal action.

John Bell concludes:

“We’ve seen an increasing number of directors reaching out for advice on CVL. The process offers a solution for businesses that can no longer meet their financial obligations, helping directors close their companies in an orderly fashion.”

With the Autumn Budget on the horizon, Clarke Bell continues to offer expert advice to help businesses navigate these uncertain times, providing tailored solutions for both solvent and distressed companies.

Sam Allcock
Sam Allcock
With over 20 years of experience in the field SEO and digital marketing, Sam Allcock is a highly regarded entrepreneur. He is based in Cheshire but has an interest in all things going on in the North West and enjoys contributing local news to the site.
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