Chancellor Rachel Reeves’ Autumn Budget, presented on Wednesday 26 November, lays out a broad package of measures set to influence the economic and regulatory landscape over the coming year.
Our MHA corporate specialists share their initial reactions to the announcements, offering early insight into the key changes and what they could mean for their company. These are our experts’ first-look views as the detail continues to emerge.
CGT on EOTs
"Although selling shareholders to EOTs will still be able to benefit from an exemption of half the gain from tax, the other half will be taxed at an average rate of around 20%. This radically reduces the incentives for shareholders to sell their companies to trusts which are for the benefit of their employees. Most sales to EOTs are structured such that a company is sold to the EOT for, say, £10m with, say, £3m upfront and the remaining £7m paid by the EOT over 5 or 6 years."
If only half of that £10m gain is sheltered from tax, the selling shareholders will suffer a c.£1m CGT bill which will be a big slug out of their initial proceeds of £3m. That will radically reduce the attractiveness of a sale to an EOT and might stop a good 50% of EOT transactions. Therefore, I doubt this measure will bring in the annual tax revenue of £900m that the government and OBR predict it will from the 27/28 tax year.
Autumn Budget Hub
MHA will help you navigate the ever-evolving tax landscape, with a range of exclusive insights and practical guidance.
